Environment Protection Authority Victoria · 2020-01-23 · Connecting with the community Year Four...

Connecting with the community YearFour

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Environment Protection Authority Victoria Connecting with the community

Annual Report 2014–2015Year Four

EPA Victoria 200 Victoria Street Carlton 3053 Telephone: 1300 372 842 (1300 EPA VIC)epa.vic.gov.au

ISSN 1446-0084

Publication No 1610 Authorised and published by EPA Victoria, 200 Victoria Street, Carlton

© State of Victoria, Environment Protection Authority 2015. The publication is copyright. No part may be

reproduced by any process except in accordance with the provisions of the Copyright Act 1968.

Step One (2010–2011) Getting down to Business

EPA Pollution Response vehicle at landfill site

Year One (2011–2012) Transforming and strengthening EPA

EPA Victoria Authorised Officers

Year Two (2012–2013) Change-ready and facing the challenges

EPA Victoria Authorised Officer badge

The images on the front cover of our Annual Reports illustrate EPA Victoria’s journey to becoming a modern regulator. This year’s image shows community members participating in a citizen science project in the Latrobe Valley. These citizen scientists are monitoring water quality in a local waterway.

EP

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14 Tackling pollution at the source

Year Three (2013–2014) Tackling pollution at the source

Urban stormwater

Year Four (2014–2015) Connecting with the Community

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TABlE OF CONTENTS

1. Declaration 2

2. About EPA 3

3. Chairman’s report 4

4. Chief Executive Officer’s report 5

5. Purpose and functions 6

6. 2014–15 performance 7

7. Financial performance summary 20

8. Organisational structure and governance arrangements 22

9. Workforce data 26

10. Other disclosures 28

11. Disclosure index 36

12. Certification of financial statements 38

13. Independent auditor's report 39

14. Comprehensive operating statement 41

15. Balance sheet 42

16. Statement of changes in equity 43

17. Cash flow statement 44

18. Index to notes to the financial statements 45

19. Notes to the financial statements 46

Connecting with the community Year Four

2 EPA ANNUAl REPORT 2014–2015

In accordance with the Financial Management Act 1994, we are pleased to present the Environment Protection Authority (EPA) Victoria Annual Report for the year ending 30 June 2015.

Cheryl Batagol Chairman

Environment Protection Authority Victoria

Responsible Body

Melbourne 31 August 2015

Nial Finegan Chief Executive Officer


Accountable Officer


1. DEClARATION

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2. ABOUT EPA

Our visionA healthy environment that supports a liveable and prosperous Victoria. Our vision supports the achievement of the environmental outcomes depicted in the diagram to the right.

Our roleWe are an effective environmental regulator and an influential authority on environmental impacts.

Our role in governmentEPA is a statutory authority created under the Environment Protection Act 1970 (EP Act) and an administrative office in relation to the Department of Environment, land, Water and Planning (DElWP) by Order under Section 11 of the Public Administration Act 2004. The responsible Minister is the Hon. lisa Neville MP, Minister for Environment, Climate Change and Water.

Our guiding principlesThe following principles guide our work and outline what Victorians can expect from EPA:

• accountable

• transparent

• effective

• inclusive

• authoritative

• consistent

• targeted

• proportionate.

More information about EPA’s guiding principles is available in our 5 Year Plan (publication 1403).

C L E A N A I R

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VISION

A healthy environment that

supports a liveable and prosperous

Victoria



In this annual report we look back on the penultimate year of Environment Protection Authority (EPA) Victoria’s reform program outlined in its 5 Year Plan. EPA is, in many respects, a different organisation to the one it was in 2011. It is continually learning from the community it serves and the environment it protects.

EPA continues to evolve. Over the past year EPA undertook a renewal of its leadership executive team, beginning with the introduction of Nial Finegan who joined as Chief Executive Officer in August 2014. Nial and his new executive team hit the ground running, quickly becoming acquainted with the many challenges EPA faces.

EPA also reinvigorated its focus on the Victorian community it serves. Throughout the year EPA responded to community concerns relating to asbestos exposure in Sunshine North, continued to engage with the community in the latrobe Valley, and continued to improve the environmental outcomes for residents around the Brooklyn Industrial Precinct. EPA’s Citizen Science Program, highlighted on the front cover, is further empowering communities by partnering with them so they can better understand their environment and make informed decisions relating to its protection and enhancement.

EPA's continued focus on building its skills and capability is best evidenced by the 14 new Authorised Officers who successfully passed their training course in 2014–15, each committed to working with Victorians to protect our shared environment.

As we approach the end of our 5 Year Plan we have many opportunities to learn from our own experience. With that in mind, we welcome the Victorian Government’s independent inquiry into EPA, which began on 1 June 2015.

The independent inquiry will look closely at Victoria’s Environment Protection Act 1970, which is now more than 44 years old. We look forward to the Inquiry's outcome and the government response, which will set EPA up for the next 40 years and ensure we can protect the Victorian environment for future generations.




3. CHAIRMAN’S REPORT


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4. CHIEF ExECUTIVE OFFICER’S REPORT

Since its inception in 1971, Environment Protection Authority (EPA) Victoria has worked to deliver a healthy environment that supports a liveable and prosperous Victoria.

In 2014–15 we delivered the fourth year of our 5 Year Plan to improve how we regulate and how we work with the Victorian community to better protect the environment. The EPA is committed to listening to, learning from and working with the community we serve.

In June 2015, the Victorian Government commenced its independent inquiry into EPA. The Inquiry offers an exciting once-in-a generation opportunity for the Victorian community to share its views on how EPA can meet the challenges it will face over the next 40 years.

In October 2014, EPA became aware of community concerns relating to possible asbestos exposure in Sunshine North. EPA, together with our partners in the Department of Health and Human Services and Brimbank City Council, responded to ensure local residents had access to accurate and timely information. We undertook testing in homes and sat down with individual families to explain what the testing and results meant for them. We hosted community ‘open house’ forums to ensure people had access to the type of information and experts they needed to feel reassured and confident in their own environment.

Further improvements in conditions in the Brooklyn Industrial Precinct, an area where dust from local industry continues to affect residents, were made over the past year. EPA continued to work with its partners in state and local government, industry and the community and, earlier this year, the Victorian Government announced a $1.85 million contribution towards sealing two of the area’s dustiest roads. This significant milestone will lead to a marked improvement in air quality for local residents and workers. This work will also allow EPA to better target outstanding issues and drive further improvements in the area.

In the latrobe Valley our successful Citizen Science pilot project offered the local community an important opportunity to engage with, and contribute to, environmental monitoring. This pilot project was designed in partnership with residents to ensure their insights and local knowledge shaped EPA’s work. EPA provided water quality testing kits and training to schools and individuals across the latrobe Valley to encourage and support them to take an active role in protecting their own environment. We look forward to publishing the results.

Citizen Science and building local understanding and capability are helping to build community trust in EPA as a regulatory agency. EPA was pleased to be able to support Voices of the Valley by providing them with training and equipment so that they could monitor their own local air quality.

EPA is working with partners across government, industry and the broader community to deal with legacy contamination at old industrial sites. This work is underpinned by EPA’s statutory tools that ensure open and transparent processes give the community confidence in its work. The remediation of the Alcoa Point Henry aluminium smelter and Anglesea power plant are high-profile examples of this work.

We continued to develop our environmental monitoring capability, with 14 new Authorised Officers from Bendigo, Wangaratta, Geelong and Melbourne successfully completing their comprehensive training. EPA now has 104 Authorised Officers.

On a more personal note, and as I complete my first year at EPA, I’d like to acknowledge the very professional, hard-working and committed staff that I have had the privilege to lead. We have a strong and positive culture that is committed to continually improving how it delivers real public value.






EPA was established as an independent statutory authority under the Environment Protection Act 1970 (EP Act) and began operating in 1971.

The EP Act defines EPA’s powers, duties and functions, and provides a framework for the prevention and control of air, land and water pollution, industrial noise and waste.

EPA works across Victoria. Its central office is at 200 Victoria Street, Carlton. EPA’s Centre for Applied Sciences is located in Macleod. Regional offices are located in Bendigo, Carlton, Dandenong, Geelong, Traralgon and Wangaratta.

The responsible Minister is the Hon. lisa Neville MP, Minister for Environment, Climate Change and Water.

EPA works closely with DElWP to develop environment protection policy and legislation and to deliver programs that support environmental protection.

EPA also works closely with other Victorian Government departments, regulators, local government, industry and community to achieve outcomes and a healthy environment that supports a livable and prosperous Victoria.

5. PURPOSE AND FUNCTIONS


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6. 2014–15 PERFORMANCE

Monitoring the environment: A snapshot of Victoria’s environmentAir quality

Victoria’s air quality in 2014–15 was generally good. There were a total of 22 days across the network of monitoring stations where the daily average exceeded the standard for small particles classified as PM

10. Of these, 17 occurred

in the Brooklyn Industrial Precinct. This site is discussed on page 10 of this report. The number of exceedance days at Brooklyn has decreased over the last two years. local dust impacts detected at other parts of the air monitoring network generally coincided with dry periods and light winds.

There were a total of eight days across the air monitoring network where the daily average exceeded the advisory daily standard of 25 µg/m3 for small particles classified as PM

2.5. Of these days, three were the result of bushfire

activity, two were the result of domestic heaters during the colder months and three occurred as the result of planned and local fuel reduction burns.

Water quality

The past year has been relatively dry and warm, with average or below average rainfall across most of the state. This translated into reduced flows in rivers, and into lakes and wetlands, although not to the extreme extent experienced in the millennium drought. Where water levels reduced, a decline in quality was indicated by increasing salinity and decreasing dissolved oxygen levels. There were no significant drying events, although fish deaths occurred in some drying wetlands. Bacterial water quality in the Yarra River improved at Healesville and was consistent at other monitored sites, with an overall trend that more spots were safer for swimming.

With lower than average inflows to our coastal and marine systems, impacts from turbid stormwater plumes on marine ecosystems were minimal and no outbreaks of excessive algal growth were observed. No significant fish kills or pollutant spills were reported and swimming conditions in Port Phillip Bay for the 2014–15 summer season were exceptionally good. During this period, EPA has been handling numerous requests for expansion of land-based abalone aquaculture, and assessing a variety of novel marina expansions. Collaborative research into seagrass resilience was completed in 2015, highlighting sensitivity of this important marine habitat to deteriorating water clarity and increased exposure to erosive currents and waves.

Land (and waste)

Contaminated land

Historically, land contamination has been a consequence of many types of industrial activity, most frequently occurring in urban centres. As the competitive advantages of inner urban locations decreases, many industries are moving to green-field sites on the outskirts of cities, leaving vacant industrial land available for commercial or residential development. Such land often bears a burden of contamination which can significantly restrict its development potential. The most common soil contaminants requiring management are metals such as lead and arsenic, and organic compounds such as petroleum hydrocarbons and polycyclic aromatic hydrocarbons (PAHs).

Waste

Efforts to reduce the volume of waste sent to landfill have resulted in greater diversity of wastes being proposed for alternative uses which may result in the waste going into land through its inclusion in other products, for example, compost.

Waste to landfill data shows that between April 2012 and March 2015 there was an approximate 20% decrease in Category B waste disposed to landfill per year, while the volume of Category C waste disposed to landfill increased by approximately 30% per year over the same period. The reduction in Category B waste disposed to landfill includes wastes from manufacturing industries and contaminated soils that are more hazardous than the Category C wastes.

Noise

Consistent with the previous year, EPA was involved in over 50 noise assessments during the year; these included responding to noise complaints associated with trucks in the inner western suburbs of Melbourne, mining and industrial facilities and also music festivals. EPA investigated issues using noise loggers to monitor the background levels as well as those associated with the complaint. The noise levels were evaluated against the State Environment Protection Policies (SEPPs) for Noise. Where noise levels were above levels in the SEPPs, EPA used its regulatory powers to ensure reduction in the level of noise.

Odour

EPA’s role as the environmental regulator means that it is often called upon to respond to complaints of odour from a range of sources. These include industrial sources, as well as agricultural and domestic. In addition to dealing with current odour issues, EPA has a role in reducing the frequency and intensity of odour issues in the future. The assessment of odour and potential future encroachment are key considerations in the approvals process of changes to current and new industries. There were approximately 25 per cent less odour related pollution reports than in the previous year.



6. 2014–15 PERFORMANCE CONTINUED

Pollution reports

In 2014–15 EPA received over 10,800 pollution reports from the community and industry. Over 85 per cent of all pollution reports are from the community. Table 6.1 shows an eight per cent reduction from the previous year, mostly attributed to fewer odour related pollution reports.

Table 6.1: Total pollution reports

2015 2014 2013 2012

Total pollution reports 11,172 12,005 12,094 10,723

Table 6.2: Pollution reports by region

Metro South Metro South West Gippsland North West North East

Odour 1,540 1,010 387 282 203 208

Noise 873 225 176 85 232 59

Waste 783 360 229 165 182 113

Water 892 252 190 207 112 132

Dust 335 169 190 181 51 47

Smoke 152 42 38 55 30 32

Emergency 153 47 30 17 10 21

Total (1) 4,728 2,105 1,240 992 820 612

1. 675 pollution reports were not allocated as at 30 June 2015

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Delivering on EPA’s strategic prioritiesThis Annual Report covers the penultimate year of EPA’s 5 Year Plan. The 5 Year Plan sets out EPA’s priorities for environment protection. EPA’s annual reports tell the story of the organisation throughout its transformation into the modern regulator it is today.

In 2014–15 EPA has continued its delivery of strategic priorities in the 5 Year Plan. Our strategic priorities are to:

• deal with past pollution: reduce environmental and health impacts of historical contamination

• tackle current environmental issues: tackle pollution and ensure compliance using a risk-based approach

• shape the environmental future: anticipate and act on future impacts.

Dealing with past pollution

Contaminated environments

Contaminated sites are a complex problem. Sites requiring active management are listed on public registers that EPA continues to maintain on its website. Through working with partners in government and through research projects, EPA continues to build its understanding of the risks posed by contaminated environments with the aim of improving management practices.

In 2014–15 EPA continued to monitor contaminated sites requiring active management to clean up, monitor or prevent pollution of land or groundwater. EPA’s regulatory efforts included carrying out inspections, issuing remedial notices and assessing compliance with existing notices.

A strategic approach to reducing the risk posed by leaking underground petroleum storage systems

Working with industry representatives, EPA has developed a ‘Monitoring for leaks self-evaluation checklist’ for operators of underground petroleum storage systems at service stations. The checklist will enable operators to assess their environmental performance and improve awareness and management of environmental risks. EPA has also developed guidance for underground workers to report petroleum leaks they encounter. Both the checklist and the guidance will be distributed in early 2015–16.

Reform of the environmental audit system

EPA continued its reform of the environmental audit system, achieving harmonisation of initial auditor appointment processes with New South Wales. The reform has improved the timeliness of Clean Up to the Extent Practicable decisions. Now, over 90 per cent of decisions are made in less than 56 days. EPA has introduced a risk-based approach to reviewing decisions made by appointed auditors in which EPA will review a smaller proportion of decisions.

Focus on major sites

EPA works with the Victorian government to advise on the management and rehabilitation of sites where there is a risk of contamination; for example, the former defence site in Maribyrnong and the proposed E-Gate development.

EPA is working with other agencies, Alcoa and the community, to oversee the cleanup and remediation of the Point Henry aluminium smelter and the Anglesea power plant. This work aims to return these sites to productive use which benefits the community and local industry.

EPA advice informs development of Fishermans Bend

EPA has partnered with the Metropolitan Planning Authority (MPA) to deliver a precinct-scale groundwater study as part of the development of Fishermans Bend. The study will enable faster, safer and more efficient regulatory decisions throughout the development process. The final report is due in 2015–16 and will provide stakeholders with clarity on the environmental condition of the site.

Table 6.3: Performance against key indicators of progress

2014–15 Annual Plan 2014–15 progress

Delivery of implementation objectives for the Contaminated Environments Strategy

continuing

Achievement of environmental audit system reform objectives as outlined in the Statement of Expectations

completed

Development of agreed management plans for major sites

continuing




Tackling current environmental issues

EPA is focusing on improving outcomes in focus areas that require an innovative response or a combination of approaches from our regulatory model.

Brooklyn Industrial Precinct

2014–15 saw improved conditions in the Brooklyn Industrial Precinct; an area where dust from local industry has impacted residents. EPA has continued its focus on improving outcomes by working with local government, industry and the community and by actively regulating industrial sources of dust.

Positive results for the Brooklyn Industrial Precinct

In 2014–15, there were 17 days above the goal for PM10

in the Brooklyn Industrial Precinct. This is the lowest number of days over the limit since targeted monitoring began in 2009. The result is particularly positive given the low amount of rainfall, which reduces dust, for the year. Odour reports continue to be at record low levels.

Organics

Organic material makes up more than 60 per cent of all waste disposed of in Victorian landfills. Initiatives to divert organic material from landfills are in place. Proper management of organic material is required to reduce potential harm to surface and groundwater, and odour impacts on local communities.

New guidance for composting facilities

In 2014–15, EPA released Designing, constructing and operating composting facilities (EPA publication: 1588). This guidance provides composting operators with advice on how to reduce the impact of composting facilities on human health and the environment. The guidance shows operators how they can prevent or resolve non-compliance issues and will assist EPA in making consistent decisions regarding approvals and licensing of these facilities.

Landfills

landfills provide an important service to business and the community. Effective management reduces the impact of landfills on communities in surrounding areas.

In 2014–15, EPA conducted over 90 inspections of currently operating licenced landfills and 29 inspections to ensure compliance with post-closure Pollution Abatement Notices on closed, formerly licensed landfills. EPA has conducted research to better understand leachate management practice and will drive improvement through our regulatory tools, including licences, to protect groundwater and reduce the impact of odour on local communities.

Responding to community concerns about odour

EPA officers completed 15 odour surveillance operations in residential suburbs surrounding the Ravenhall landfill and neighbouring composting facility where there is community concern. The proactive monitoring sought to determine the cause and conditions giving rise to odour impacts. The results of the testing will be published on EPA’s website.

Illegal waste disposal

Illegal disposal of waste undermines Victoria’s waste management and recycling systems. It also has potential to impact on the community’s experience of their environment.

New regulations for storage of waste tyres

In 2014–15, EPA introduced regulations to reduce the risk of tyre fires from unsafe storage of waste tyres. The development of the new regulations was led by EPA, with support from DElWP, Victoria’s fire services, and with input from industry associations and tyre recycling businesses.

EPA issued 129 notices to stop or clean up illegally dumped waste. EPA also served 17 penalty infringement notices for illegal dumping, ensuring culpable receivers, transporters or dumpers of waste were held to account.

Table 6.4: Brooklyn Industrial Precinct summary statistics

Indicator Notes 2015 2014 2013 2012 2011 2010

Days where dust levels (PM10

) exceeded the limit 1 17 29 33 20 19 40

Rainfall (mm) 2 383 459 387 611 850 n/a

Pollution reports related to odour 166 148 421 487 628 1250

1. Results for 2009–10 reflect estimates from available data. 2. Further analysis of pollution reports related to odour has resulted in revised numbers for previous periods.

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Stormwater contamination in urban areas

The combination of large volumes of water and the timing of the run-off means that contamination of our stormwater can cause degradation of our waterways.

Using targeted inspections to reduce the risk posed by the electroplaters industry

EPA continued its electroplaters compliance program, which aims to reduce the impact of heavy metals on Victorian waterways. In 2014–15 EPA inspected 21 electroplaters with requirements to improve their environmental performance under an EPA notice. The inspections showed that in many cases practices have improved.

Ensuring compliance through maintenance of statutory tools and follow-up activity

Licensed premises

In 2014–15, EPA carried out 800 compliance checks on businesses with an EPA licence, or with obligations to clean up or stop polluting, under an EPA notice. EPA uses intelligence gathered from past inspections, annual performance statements submitted by licence holders and compliance history to focus its effort.

Regulatory programs

EPA oversees a number of programs to ensure businesses and individuals appropriately manage waste. In 2014–15 EPA issued 2,950 notices for noisy or smoky vehicles. EPA also assessed compliance at 10 per cent of an estimated 3,000 non-accredited ships using Victorian ports and sanctioned owners or captains on 10 occasions. EPA also ensured the integrity of some of its programs including risk based auditing of landfill levy statements, Annual Performance Statements and business reports against the National Pollutant Inventory.

EPA joins roadside inspections targeting noisy and smoky vehicles

In 2014–15, EPA joined 12 roadside inspections of vehicles, testing for compliance with noise and air quality regulations. The tests were undertaken in partnership with Victoria Police and VicRoads officers. As a result, 64 drivers were issued with notices to reduce the noise made by their vehicles and to have them re-tested to ensure compliance.

Major industries program

During the second half of 2014–15 EPA formed a specialist team to focus on reducing environmental risks associated with major industries through auditing environmental management systems. Pilot audits have been undertaken and used to develop an ongoing major industries audit program which will roll out in 2015-16.

Litter reports and fines

In 2014–15, EPA received a 10 per cent increase in the number of litter reports and issued over 13,400 fines for littering throughout the year. Fines for littering range from $295 for littering with a small piece of rubbish or unlit cigarette to $590 for a lit cigarette. Victorian courts have the power to apply higher fines.

Summer litter campaign

EPA’s 2015 summer litter campaign recruited 4,630 new litter reporters and resulted in over 10,000 litter reports and 6,334 fines. Almost 60 per cent of infringement notices were for lit cigarettes.

Responding to pollution events and emergencies

Pollution response

In 2014–15, EPA responded to over 1,100 pollution incidents following pollution reports made by the community and industry. Officers attend pollution incidents where there is a reasonable likelihood of environmental harm and potential for detection. Multiple pollution reports may relate to a single pollution incident.

Responding to asbestos in Sunshine North

EPA was alerted to a number of potential issues relating to asbestos risks associated with the former Wunderlich site in Sunshine North. EPA immediately investigated the site and required the site owner to improve protective capping measures through issuing Pollution Abatement Notices. Asbestos sheeting was also found illegally dumped in the adjoining railway reserve, which was immediately cleaned up.

In response to community health concerns, EPA delivered a comprehensive in-home asbestos monitoring program as part of a health study guided by an Expert Advisory Group that was appointed by DHHS. EPA tested 56 homes surrounding the former factory site, hosted three community engagement events and visited several home owners to explain the results.

All the homes tested were declared safe from in-home asbestos risk by the Expert Advisory Group. EPA continues to monitor the situation to ensure confidence in the measures in place on the former Wunderlich site.



EPA responds to community concerns about fish deaths in Wangaratta

In March 2015, EPA officers investigated reports of 200 dead fish at Three Mile Creek in Wangaratta. The investigation was undertaken in collaboration with DElWP, Parks Victoria, Victoria Police and Wangaratta City Council. EPA undertook sampling of the creek. Evidence collected suggests that a non-hazardous chemical present in the creek at the time combined with an algal bloom to significantly reduce the oxygen levels in the water. EPA officers conducted daily monitoring as the creek returned to its normal condition.

Testing methane levels near the closed Ball Road landfill in Heatherton

In May 2015, following notification from an independent monitoring consultant, EPA monitoring concluded that methane detected in service pits within a residential area was most likely originating from an adjacent landfill in Ball Road, Heatherton. EPA officers conducted monitoring over a three-day period to ensure methane gas levels in the area were safe. The officers provided advice and information to residents and completed testing in homes near the former landfill site. The results concluded no risk to the community.

EPA issued a Pollution Abatement Notice to require that further landfill gas bores are installed at the site and further monitoring is undertaken in accordance with current best practice standards.


Table 6.5: Performance against targets in the Annual Compliance Plan

Indicator Notes2015

Target2015

Actual

Percentage of licensed sites will have received a licence compliance inspection in the last three years

100% 100%

Percentage of annual performance statements (APSs) reviewed and compared to information held by EPA

100% 100%

Detailed site-based assessments of APSs 30 31

Targeted inspections resulting from intelligence from waste transport certificates, APSs, National Pollutant Inventory (NPI), landfill levies or financial assurances

1 60 26

Percentage of incidents requiring immediate attendance (high environmental risk/likelihood of detection and mitigation) inspected

95% 99%

Percentage of incidents requiring planned attendance (moderate environmental risk/ likelihood of detection and mitigation) inspected

90% 99%

Percentage of works approvals, research, development and demonstration approvals (RD&Ds) and exemptions assessed for works complete upon duty holder notification

100% 100%

Percentage of high-risk 30A emergency discharge approvals inspected 2 90% n/a

Closed landfill inspections 26 29

Percentage of notices complied with by the due date or escalated in line with the EPA’s Compliance and Enforcement Policy (EPA publication: 1388)

3 90% 87%

Percentage of inspected sites that had an identified operator receive an inspection report 4 100% 98%

1. EPA uses a number of intelligence sources to direct its activities. Overall, EPA undertook 410 targeted inspections. The intelligence resources referred to in this measure are valuable tools that inform EPA action which is not always limited to an inspection.

2. EPA issued six approvals for discharge under section 30A of the EP Act, in assessing the risk to environment and human health, EPA decided that the approvals did not trigger an inspection.

3. Performance reflects EPA having followed up on a higher number of remedial notices than in previous years.

4. A small number of sites were yet to receive an inspection report as at 30 June 2015.

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Emergency response

EPA’s experienced and trained emergency response officers provide 24-hour support to Victorian emergency services and the community. EPA officers assess the environmental impact of an incident and determine practical measures to ensure proper cleanup and disposal of waste, and investigate for any breaches of the EP Act.

In 2014–15, EPA officers responded to over 100 emergency incidents. EPA has recently begun reform to improve its emergency management and response functions.

Delivery of the Annual Compliance Plan

The activities described above reflect EPA’s effort to tackle current pollution and deliver on the objectives specified in the 2014–15 Annual Compliance Plan. The plan outlined 11 operational performance indicators.

Support planning and development decisions to prevent impacts

Residential encroachment on critical industries

EPA is aware that when new residential development is allowed too close to existing industry, residents are affected by odour, dust and noise.

In 2014–2015, EPA was party to four Planning Panels Victoria hearings that considered this issue. Those hearings concerned the buffers around the Burra Foods Milk Processing Plant in Korumburra, the Midfield Meat Processing Plant in Warrnambool, a number of landfills, waste transfer and materials recycling facilities in Clayton South and Heatherton, and the Australian Paper Pulp Mill in Maryvale. EPA’s submissions included explanations of the relevant environmental policies, reviews of the technical reports, analysis of pollution reports data, and details of the industrial operation’s compliance history. The Panel recommendations following each of those hearings were in line with, and referenced, EPA’s submissions.

Engaging with stakeholders to prevent encroachment

EPA is proactively seeking input from stakeholders to address residential encroachment on existing industries. EPA has established an external steering group to help EPA develop an options paper on better managing encroachment through the planning system. The group comprises representatives from state and local government, a water authority, the Metropolitan Planning Authority, the Municipal Association of Victoria, the Metropolitan Waste and Resource Recovery Group and Australian Industry Group.

Major enforcement activity

Prosecutions

There were five prosecutions completed in 2014–15. Four were related to illegal dumping in Tatong, in North East Victoria.

Illegal dumping in Tatong, North East Victoria

The company responsible for organising the illegal dumping was convicted and fined. The director of the company responsible for organising the prescribed industrial waste to be buried on the property, the company who undertook the demolition and burial works and the owner of the land were all fined without conviction for their part in the illegal dumping.

Pollution of waters in Ascot, North West Victoria

EPA successfully prosecuted a duty holder following contravention of a Minor Works Pollution Abatement Notice. The notice required the duty holder to ensure that no sediment was deposited beyond the boundaries of their premises and that the sediment controls were installed in accordance with the relevant EPA publications. The contravention was due to insufficient pollution control measures that resulted in turbid water being pumped from a subdivision site into the adjacent creek. The duty holder was fined without conviction.

Enforceable undertakings

An enforceable undertaking is a constructive alternative to prosecution under certain criteria. It allows an alleged offender to voluntarily enter into a binding agreement to undertake tasks to settle a contravention of the law, improve environmental condition and the experience that the community has of its environment.

Dumping and burning of industrial waste at Mount Beckworth, Clunes

EPA successfully secured an enforceable undertaking with the Hepburn Shire Council for the deposit and burning of industrial waste generated by civil works conducted by the council (and its predecessor) at a council-run site at the base of Mount Beckworth between 2001 and 2011. The enforceable undertaking commits the council to a range of actions including: making improvements to how it deals with green waste generated at transfer stations; implementation of a green waste strategy that is in line with best practice; reviewing all internal policies and procedures regarding the disposal of industrial waste; undertaking a community education program about waste disposal; assisting in improving the environmental performance of the relevant industry more broadly; installing solar panels at Clunes Warehouse (a community facility); and interpretive signage at the Cenotaph in Clunes on Mount Beckworth. The cost of compliance with the enforceable undertaking will be approximately $62,000.



Community environmental impact projects

Under the EP Act, a Magistrate can direct a company to fund a community environmental impact project as an alternative to a fine from the court. There were 10 community environmental impact projects implemented in 2014–15.

Table 6.6: Summary of 67AC orders implemented in 2014–15

Company Community groupAmount funded Project

Barro Group Pty ltd

Murrindindi Climate Network Inc.

$64,800 Developed a voluntary green code of practice to improve environmental performance of small and medium size business in the tourism, retail and services sectors.

Barro Group Pty ltd

Yea Wetlands Trust $60,000 Designed and installed the Interpretive Education Display which forms a part of the new Water Discovery Information Centre in Yea.

Golden Circle limited

Friends of the Gorge

$50,000 Improved the aquatic environment of the Morang Wetlands by reintroducing Growling Grass Frogs, planting aquatic and terrestrial flora, drought-proofing quarry wetlands, controlling pest plants and animals, and establishing a water quality monitoring regime.

Enabled specialist technical advice and assistance to the Friends of the Gorge and water quality training for the community and local school children by Healthy Waterways Waterwatch and Darebin Creek Management Committee personnel.

Mecrus Pty ltd Gippsland Climate Change Network

$75,000 Developed a Sustainability Fellowship Program for 40 participants from the community, business and government sectors across Gippsland’s six municipalities.

Mobil Refining Australia Pty ltd

Port Philip Eco Centre Inc.

$150,000 Enabled the recruitment, coordination and training of volunteer guides to educate visitors about the St Kilda penguin colony and the Bay’s natural values and the expansion of a litter reduction project.

Nuplex Industries (Aust) Pty ltd

Rural City of Wangaratta

$160,000 Undertook tree planting and landscaping in key streetscape areas of Sisely Avenue and Wareena Park, Wangaratta, which had been affected by the pollution incident.

Schutz DSl (Australia) Pty ltd

Western Melbourne Catchment Network

$40,000 Weed clearing, building a rabbit-proof fence and restoring the Cherry Creek Grassland to its natural state by planting indigenous grasses.

SITA Australia (Enforceable Undertaking)

City of Casey $50,000 landscaping and planting mature trees at Elliot Kingsfield Reserve, lynbrook.

SITA Australia (Enforceable Undertaking)

Port Phillip and Westernport Catchment

$5,000 Delivered works including revegetation, weed and rubbish removal, community awareness raising activities in River Gum Creek Reserve, Hampton Park and Birds of River Gum Creek educational material and associated activities.

Transpacific Industries Pty ltd

Portland Community Garden landcare Group Inc.

$80,000 Developed a community garden on the old Portland High School site.


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Summary of compliance, enforcement and assessment activities

The table below provides a statistical summary of EPA’s compliance, enforcement and assessment activities during 2014–15.

Table 6.7: Compliance, enforcement and assessment activities

Activity Notes 2015 2014 2013

Industry programs

Inspections 1 2,252 2,950 2,566

Pollution abatement notices 300 265 220

Clean up notices 233 206 125

Minor works pollution abatement notices 76 88 92

Official warnings 2 94 36 33

Penalty infringement notices 2 64 29 28

Environmental audits completed 218 207 200

Works approvals issued 26 31 44

Applications exempt from the need for approval 36 19 -

licences amended / transferred 56 54 62

Planning referrals advised on 787 795 532

Vehicle programs

Noisy vehicle notice 3 1,731 2,141 4,705

Smoky vehicle notice 3 1,219 1,404 4,464

Infringement notices 36 13 55

Official warnings 15 4 14

Litter programs

Infringement notices 13,403 12,859 16,527

1. While EPA undertook a lower number of inspections, a higher number of remedial notices and sanctions were issued, indicating more targeted inspections.

2. EPA has increased its focus on holding offenders to account; as a result, there were more official warnings and penalty infringement notices issued than in previous years.

3. EPA has identified a system issue that has impacted the number of notices issued for noisy and smoky vehicles. The issue is being

investigated and is expected to be resolved in early 2015–16.


2014–15 Business Plan 2014–15 progress

Successful delivery of strategic programs for focus areas continuing

Achievement of compliance and enforcement objectives specified in the Annual Compliance Plan

completed

Successful implementation of the updated planning strategy continuing



Shaping the environmental future

Implementation and support for policy development

In 2014–15, EPA revised its policy development program in response to changes in the operating environment.

State Environment Protection Policies

EPA continued to support DElWP to review the Waters of Victoria and Groundwaters of Victoria State Environmental Protection Policy (SEPP). Work on the review will continue in 2015–16.

EPA partnered with DElWP to commence the review of both noise SEPPs: SEPP Control of Noise from Industry, (Commerce and Trade) No. N-1 (SEPP N-1) and SEPP (Control of Music Noise from Public Premises) No. N-2 (SEPP N-2). In August 2014, EPA released a discussion paper for public consultation, and held a series of public workshops. Work on the review will continue in 2015–16.

EPA Regulations

EPA worked in partnership with DElWP to develop the Environment Protection (Scheduled Premises and Exemptions), (Industrial Waste Resource) and (Fees) Amendment Regulations 2015. The regulations aim to minimise the environmental and public health risk, mainly fire risk, from inappropriate storage of waste tyres in Victoria.

National standards

EPA continued its role in developing revised national air quality standards including reporting standards for particle pollution (PM

2.5 and PM

10). A review of the standards for

ozone, sulfur dioxide and nitrogen dioxide commenced.

Licence modernisation

In 2014–15 EPA began the implementation of a program that will deliver a more modern, robust, enforceable and contemporary licensing system. The first round of licence reviews will occur under the new framework in the next 12 months.

Earned autonomy pilot program begins

EPA has identified high-performing licensees to participate in an earned autonomy pilot program. The program, which will run until April 2016, will test the concepts of earned autonomy by offering scaled benefits to participants based on their environmental performance.


2014–15 Business Plan 2014–15 progress

Achievement of policy development and reform objectives

as described above, this program was adapted during the year.

Achievement of approvals reform objectives

completed, see table of indicators on page 19.

Building on our corporate capabilitiesEPA has proactively developed its corporate capabilities through the delivery of the 5 Year Plan. EPA’s corporate capabilities are to:

• exercise our regulatory powers

• apply our knowledge and authority

• build strong partnerships

• transform into an effective organisation.

Exercising our regulatory powers

EPA operates a quality assurance program to ensure effective use of our regulatory powers. Quality assurance is an important input into EPA process improvements and a way to ensure the consistency of regulatory practice, for example, by the issue of sanctions or remedial notices.

EPA has ensured that stakeholders’ concerns are addressed through a formal complaints process. In 2014–15, EPA received two complaints regarding EPA officers. The complaints were reviewed and in both cases were not substantiated. No further action was required.

Applying our knowledge and authority

EPA has completed its applied science capability reform. The reform has enabled EPA to improve its effectiveness with regard to environmental monitoring and communication of scientific information.

Citizen Science Program and environmental monitoring to support the Hazelwood Recovery Effort

EPA provided water testing training sessions for the community as part of EPA’s pilot Citizen Science Program in the latrobe Valley. EPA-sponsored equipment was provided to citizen scientists who have been trained to actively monitor their environment. They will collect data to raise awareness of, and provide valuable information about, the health of their environment. The pilot program in the latrobe Valley was designed with the community to support EPA’s Hazelwood Recovery Program.

Throughout 2014–15, EPA published regular environmental monitoring results from EPA’s Hazelwood Recovery Program on its website using a new interactive map. This feature is one of a number of changes to EPA’s website, which makes scientific data and information accessible. Input from community members, based on local knowledge of their environment, informed part of the final technical reports on the 14 months of monitoring. The reports are available on EPA’s website.


17

Building strong partnerships

EPA’s reference groups

EPA has continued to receive valuable insights from its three reference groups: the Community Reference Group, the Water Industry Reference Group and the Business Reference Group. The reference groups meet quarterly and discuss matters related to environment protection, community engagement and the development of new environmental standards.

Community Reference Group helps EPA engage

In March 2015, members of EPA’s Community Reference Group, along with local community members and government agencies, were invited to co-design an engagement approach to a groundwater contamination issue. The ongoing dialogue with the reference group and their involvement in the project working group is helping to improve EPA’s engagement with stakeholders.

Delivering environmental outcomes through the HazWaste Fund

The HazWaste Fund was designed to support industry to accelerate reductions in the volume and risks associated with hazardous waste (or prescribed industrial waste) generated in Victoria, and to increase remediation of contaminated soils. An estimated $30 million was made available throughout the program.

In 2014–15, eight HazWaste Fund projects were completed. The remaining 11 projects will be completed in 2015–16. More information about the HazWaste Fund, which funded 76 projects over four years, is available on the EPA website.

Transforming to an effective organisation

Improving our systems processes and practices

EPA continues to improve its systems and interfaces with the community and industry. In 2014–15, EPA provided regular online updates about its regulatory functions, including compliance and enforcement activity such as sanctions and remedial notices issued to Victorian businesses and decisions regarding works approval applications.

EPA welcomes Inquiry

On 1 June 2015, the state government began a public inquiry into EPA. The Inquiry will look closely at EPA to establish how we can protect public health while protecting the Victorian environment for future generations. The Inquiry is led by an independent Ministerial Advisory Committee comprising Ms Penny Armytage, Ms Jane Brockington and Ms Janice van Reyk. EPA looks forward to the findings of the Inquiry in 2016.

A culture that supports delivery

EPA continues to provide its people with continual learning opportunities so that they are skilled and capable to best serve the community. EPA’s 2014–15 learning and development program included the introduction of a mentoring program that features career leadership, technical, and reverse mentoring which provides opportunities for our staff to mentor our leaders.

EPA wins IPAA Leadership in the Public Sector Award

EPA’s Expertise Framework Program won the 2014 People Development Award at the Institute of Public Administration Australia’s (IPAA) leadership in the Public Sector Awards (Victoria). The Expertise Framework Program provides a robust mechanism for identifying people who have the highest technical knowledge, leadership and communication skills in EPA’s environmental and industry areas.

The program recognises and rewards people by appointing them as Principal Experts in air quality, water quality, land and groundwater, odour, noise, landfill and waste. Principal Experts provide advice to EPA’s decision makers on complex issues, mentor the next generation of experts and represent EPA at community events.

New officers graduate from EPA authorisation training

Officers from Bendigo, Wangaratta, Geelong and Melbourne graduated from authorisation training in May 2015. The 14 graduates undertook 12 weeks of intensive training that involved environment protection theory and practice and hands-on training in the field by carrying out inspections, water and soil sampling, and odour investigations.

Status of EPA’s transformation program

EPA has implemented 25 out of the 26 transformation initiatives designed to enable delivery of the 5 Year Plan. In 2014–15, EPA began implementation of the environmental assessment framework, the final initiative in progress. The framework will ensure EPA is equipped to monitor a changing environment by identifying program needs and areas which EPA will need to invest in and adapt its monitoring capability to.

Status of EPA’s implementation of the Compliance and Enforcement Review recommendations

EPA has almost completed the implementation of recommendations from the Compliance and Enforcement Review that was completed in December 2010. The final recommendation requiring implementation is that EPA significantly increases the level of prosecutions in order to ensure there are fair and appropriate consequences for serious offences under the EP Act (recommendation 8.8).



Performance against government performance targetsThe following tables show EPA’s performance against output targets set in the Victorian Government Budget Paper No. 3 Service Delivery, and committed to in the Minister’s Statement of Expectation 2014-16.

Table 6.10: Budget Paper No. 3 Service Delivery

Indicator Notes 2015 target 2015 actual

Environmental condition research reports issued, improvement tools, guidelines, policies, systems and plans completed and issued

1 54 51

Increase in EPA notices issued for illegal dumping of waste 2 60 129

EPA prosecutions are successful, and conditions in enforceable undertakings (entered into under the Environment Protection Act 1970) are focused on, improving the environmental performance of the offer

90% 100%

land audits submitted by EPA-appointed auditors are reviewed to ensure compliance with statutory requirements and guidelines

90% 93%

Notices complied with by due date or escalation in line with Compliance and Enforcement Policy

3 90% 87%

When a pollution incident is reported to EPA and follow-up contact is requested, the reporter receives this within three working days

75% 86%

Works approvals and licences completed within required statutory timelines 96% 99%

Output cost 4 $134.1m $121.3m

1. A lower than expected number of publications was completed to enable appropriate consultation. EPA expects to meet the target in 2015–16.

2. EPA's focus on illegal dumping of waste continues to result in an increased number of notices being issued for illegal dumping across Victoria.

3. Performance reflects EPA having followed up on a higher number of remedial notices than in previous years.

4. Output cost below expectations due to lower than expected distribution of grants to industry.


19

Table 6.11: Minister’s Statement of Expectations 2014–16

Measure Target 2014–15 progress

Approvals reform

Pilot new approach to providing earned autonomy to high-performing EPA licensees

Pilot launched by early 2015 Achieved

Periodic reviews of the currency and effectiveness of EPA licence conditions

Prioritisation framework and procedures developed and reviews of licences commenced by 30 June 2015

Achieved

Publication of EPA works approval summary assessment reports

Published for all works approval decisions from 31 December 2014

Achieved

Extend maximum duration of permits to transport prescribed waste or prescribed industrial waste from 12 months to five years

Five-year permits available by 30 June 2015

EPA will achieve efficiencies through other improvements outlined in the 2015–16 Annual Plan

Audit reform

Time taken by EPA for a cleanup to extent possible (CUTEP) decision following submission from an environmental auditor

90% within 56 days in 2014–15 90%

Percentage of CUTEP decisions exempt from approval by EPA (that is, decision made by the auditor)

25% in 2014–15 60%

Harmonisation of auditor appointment process with NSW EPA (pilot project for national harmonisation)

Auditors are appointed using the same criteria and similar processes by 30 June 2015

Achieved

Guidance and information

Quality of EPA’s guidance for duty holders Establish and report on the percentages of duty holders that, in 2015–16 compared to 2013–14, regard:

(a) EPA’s guidance publications as accessible, sufficient and consistent

(b) the guidance contained in EPA’s remedial notices as clear and easy to understand

In progress

Quality of information and support for the general public and for people who seek or report information on the activities of EPA and/or Victorian environmental issues, and for people reporting pollution, litter and smoky vehicles to EPA

Establish and report on the percentages of the general public, customers and community stakeholders that, in 2015–16 compared to 2013–14, regard:

(a) EPA’s information and support as accessible and meaningful

(b) EPA’s promotion of its compliance and enforcement activities and performance as effective

In progress

Quality of information and support for organisations with delegated powers under the Act

Establish and report on the level of support that organisations with delegated powers report receiving from EPA to deliver those delegated functions, in 2015–16 compared to 2013–14

In progress



Overview of financial performanceThe Victorian Government considers the net result from transactions to be the appropriate measure of financial management that can be directly attributed to government policy. This measure excludes the effects of revaluations shown on the comprehensive operating statement as other economic flows, which are outside the control of the Authority.

The Authority achieved a net result from transactions of $130 million; $45 million higher than in 2013–14. An upward trend in total income is due to the State Government’s policy decision to increase the rate of landfill levy charged per tonne of waste deposited at a landfill. The net result for the period is lower than the net result from transactions due to an increase in the bad and doubtful debts provision.

Table7.1: EPA five-year financial summary ($’000)

Notes 2015 2014 2013 2012 2011

Income from government 1 0 0 0 34,394 36,075

Total income from transactions 251,571 218,559 193,077 230,760 196,181

Total expenses from transactions (121,284) (132,834) (139,064) (135,292) (123,772)

Net result from transactions 2 130,287 85,725 54,013 95,468 72,409

Net result for the period 128,270 81,905 52,994 94,751 71,944

Net cash flow from operating activities 109,997 119,297 65,619 68,737 39,102

Total assets 594,092 473,688 397,405 341,274 239,436

Total liabilities 22,035 30,213 35,835 32,698 25,611

Net assets 572,057 443,475 361,570 308,576 213,835

1. As part of the 2012–13 Budget a decision was made to fund EPA through a greater share of the Municipal and Solid Waste Distributions as legislated in the Environment Protection (Distribution of landfill levy) Amendment Regulations 2012. Accordingly, no transactions were funded out of appropriations during 2012–13.

2. The ‘net result from transactions’ is identical to the ‘net operating balance’ for the general government sector.

Financial and business performance reviewThe net result for the period has increased by 57% compared to the previous year. An increase in municipal and industrial landfill levy revenue from $170.9 million in 2013–14 to $195.9 million in 2014–15 was largely due to rates per tonne of waste increasing by 10 per cent from the previous year and to a lesser extent greater tonnages of waste deposited to landfill.

Total expenses from transactions were $121.3 million, eight per cent less than the previous year. A summary of the distribution of total expenses is in Table 7.2.

Table 7.2: EPA operating expenses by category

2015

Employee expenses 31%

Other operating expenses 22%

Sustainability fund grants 23%

landfill levy distributions 22%

Other grants 2%

Financial position – balance sheetNet assets increased by $128.6 million compared to the previous year. An increase in cash holdings primarily relating to the Sustainability Fund is the reason for the increase in net assets. The decrease in total liabilities is due to a lower balance for payables and provisions than in the previous year.

7. FINANCIAl PERFORMANCE SUMMARY

21

Cash flowsLandfill levy cash receipts and distributions

Victoria charges a landfill levy on each tonne of waste that is disposed to Victorian landfills. levies apply to municipal and commercial wastes deposited at licensed facilities in Victoria. Under current arrangements, all revenue from landfill levies is credited to the Environment Protection (EP) Fund. This fund is established under the EP Act 1970 (s.70) and is managed by EPA. Municipal and industrial landfill levies received in the EP Fund are distributed in accordance with the Environment Protection (Distribution of landfill levy) Regulations. The regulations stipulate the amounts that metropolitan and regional waste management groups, Sustainability Victoria (SV) and EPA are allocated. The remainder of the money is then transferred into the Sustainability Fund account within the EP Fund, held by EPA.

Table 7.3: Distribution of the landfill levy in 2014–15

Notes 2015

Environment Protection Authority 1 34,009

Sustainability fund account 1 22,575

Sustainability Victoria 1 9,644

Waste and resource recovery groups 119,781

Total landfill levy cash receipts 186,009

1. All entities receiving a landfill levy distribution were given their July 2015 distribution in April (in advance) to allow confirmation of the Sustainability Fund balance prior to its transfer to the Department of Environment, land, Water and Planning.

Capital projects / asset investment programsThere were no significant capital projects during the period.

Subsequent eventsFrom 1 July 2015, amendments made to the EP Act 1970 through the Environment Protection and Sustainability Victoria Amendment Act 2014 legislates the transfer of management and administration of the Sustainability Fund from EPA to Department of Environemnt, land, Water and Planning (DElWP).

The collection of landfill levy will continue to be administrated by the EPA and the recording and distribution of the revenue will be managed by DElWP.

As a result of the legislative amendments, the cash balance of the Sustainability Fund will be transferred from EPA to DElWP as at 1 July 2015.

The transfer will result in a $383.76 million decrease in cash and investment (assets), a $47.01 million decrease in receivables (assets) and a decrease in contributed capital (equity) of $430.77 million in the 2015–16 financial year.



GovernanceChairman

Ms Cheryl Batagol was reappointed as Chairman in September 2014. The role of the Chairman is to set the standards and the strategic direction for EPA, liaise with stakeholders and monitor the organisation’s performance.

Deputy Chairman

Mr Nial Finegan was appointed as Deputy Chairman in October 2014. The role of the Deputy Chairman is to assist the Chairman in the performance of the duties of the office of the Chairman, and act as the Chairman in the absence of the Chairman. Nial is also the Chief Executive Officer.

Environment Protection Board

The Environment Protection Board is an advisory board established under section 8 of the EP Act. Its role is to provide advice to the Authority and to the Minister on certain matters. The Advisory Board is not accountable for EPA activities or operational aspects of EPA.

Mr Bob Welsh has served as Environment Protection Board President since his appointment in May 2006. Mr Ross McCann was appointed to the Environment Protection Board in September 2012. At 30 June 2015, one position on the Environment Protection Board was vacant.

Risk and Audit Committee

EPA has a Risk and Audit Committee and Internal Audit function to meet legislative requirements and support the Chairman and CEO to fulfil their obligations under the Financial Management Act 1994 (FM Act). The Risk and Audit Committee has four independent members and reports directly to the Chairman and CEO. In the absence of a formal board of governance, the Chairman and CEO remain fully accountable for their risk and audit responsibilities. The members of the Risk and Audit Committee as at 30 June 2015 were Ms Merran Kelsall (Chair), Ms Debra Russell, Mr Ian Coles and Mr Rob Hogarth. The committee met four times during the period and held one out of sessions meeting. All members attended each meeting.

Advisory committees

EPA also has two best practice advisory committees to support continuous improvement in its people, culture, science and engineering.

People and Culture Committee

The People and Culture Committee’s role is to provide advice to the Chairman and CEO in their oversight and management of EPA’s people and culture. The members of the People and Culture Committee as at 30 June 2015 were Mr Rob Skinner (Chair), Ms Kate McCormack, Ms Julie Catanach and Mr Michael Ulbrick.

Science and Engineering Advisory Committee

The Science and Engineering Advisory Committee’s role is to provide strategic advice to the EPA Chairman and CEO in their oversight and management of EPA’s science and engineering functions. The members of the Science and Engineering Advisory Committee as at 30 June 2015 were Dr John Stocker AO (Chair), Ms Leonie Walsh, Mr David Pullan AM, Dr Jennifer Stauber and Prof Tom Spurling AM.

Organisational structureExecutive Management Team

Nial Finegan, Chief Executive Officer

Nial Finegan was appointed as Chief Executive Officer in August 2014. He is responsible for the day-to-day management of EPA in accordance with the law and government policies affecting EPA. Nial provides strategic leadership and management to the organisation, ensures proper resource allocation and timely delivery of outcomes.

Chris Webb, Executive Director Regulatory Practice and Strategy

Chris Webb joined EPA in August 2010 and has led Regulatory Practice and Strategy since July 2014. The Regulatory Practice and Strategy directorate includes the development of strategic programs and engagement, operational capability improvements and the delivery of core regulatory programs and systems.

8. ORGANISATIONAl STRUCTURE AND GOVERNANCE ARRANGEMENTS

23

Knowledge, Standards and AssessmentsCathy Wilkinson

Regulatory Practice and Strategy

Chris WebbRegional Services

Damian Wells

Corporate ServicesAnnie Volkering

Damian Wells, Executive Director Regional Services

Damian Wells joined EPA in March 2015. The Regional Services directorate includes EPA’s regional offices and delivers proactive, targeted compliance and enforcement programs and performs pollution response activities.

Cathy Wilkinson, Executive Director Knowledge Standards and Assessments

Cathy Wilkinson joined EPA in March 2015. The Knowledge, Standards and Assessments directorate includes the collection and interpretation of evidence and environmental impacts and assessment of proposed activities and developments requiring approval under the EP Act.

Annie Volkering, Executive Director Corporate Services

Annie Volkering joined EPA in January 2012 and has led Corporate Services since July 2014. The Corporate Services directorate includes EPA’s core business support services of finance, technology, people and culture, legal, risk, strategic advice, marketing and communications. Corporate Services also includes EPA’s customer service function.

Figure 8.1: EPA’s organisational structure

Minister for Environment and Climate Change

Hon. Lisa Neville MP

Environment Protection Board

Risk and Audit CommitteeChief Executive Officer

Nial Finegan

DElWP (Secretary)Adam Fennessy

EPA (Chairman)Cheryl Batagol

Accountabilty

Advisory



Occupational health and safety

Policies, systems and processes

EPA’s safety vision is to eliminate work-related injuries and illnesses, unsafe work practices and promote the health, safety and wellbeing of all employees, contractors, volunteers, and visitors. EPA’s 2014–17 Occupational Health & Safety (OH&S) strategy:

• creates a positive safety culture

• maintains an effective safety management system

• reduces risk in the workplace.

The strategy is supported by an OH&S Management System that is AS/NZS 4801:2001 certified. The OH&S committee consists of 24 elected health and safety representatives, over six per cent of the total number of EPA staff, and is chaired by the CEO.

All EPA OH&S policies and procedures are consistent with the Occupational Health and Safety Act 2004, Occupational Health and Safety Regulations 2007 and the Accident Compensation Act 1985. The Victorian Public Service Workplace Determination 2012 covers the formal agreement with the CPSU regarding issues and obligations for OH&S.

Incident management

The number of incidents reported increased 113 per cent from the previous year. The increase, to 98 incidents from 46 in 2013–14, coincides with the introduction of a new reporting system and an ongoing focus on reporting near misses. Of the 98 incidents reported, 40 per cent resulted in injury or impact to an individual. Equipment or building-related incidents, slip, trips and falls, and sprains and strains account for over half of all the incidents. There was one lost time injury resulting in an employee off work for two days in 2014–15.

In 2014–15, 42 per cent of total reported incidents related to field work. EPA employees attending environmental incidents, responding to pollution and emergency reports, and entering a wide variety of non-EPA facilities and workplaces represent the most significant identified risk for EPA employees. EPA continued to focus on managing these risks through refresher training, reviewing and upgrading OH&S procedures, identifying appropriate equipment, and supporting the commitment of EPA employees to their safety and safe work practices.

EPA offers employees and their immediate families access to an Employee Assistance Program which provides confidential, professional counselling for personal or work-related issues. In 2014–15, 35 people accessed EPA’s Employee Assistance Program. Psychological incidents accounted for 15 per cent of all OH&S incidents reported in 2014–15.

There was one standard WorkCover claim for 2014–15, a small reduction on the previous year. There were no lost time claims for the year and no days lost, compared to 379 in 2013–14 and 171.9 in 2012–13.

8. ORGANISATIONAl STRUCTURE AND GOVERNANCE ARRANGEMENTS CONTINUED

25

Performance against OH&S management measures

Table 8.1: Performance against OH&S management measure

Measure Key Performance Indicator Notes 2015 2014 2013

Incidents No. of incidents 1 98 46 47

Rate per 100 Full Time Equivalents (FTE) 27.2 14.24 13.60

Injury Rate 2.84 1.13 1.79

lost time injuries (lTI) 1 4 5

lost time injury frequency rate (lTIFR) 1.89 7.47 7.21

Claims No. of standard claims 2 1 2 4

Rate per 100 FTE 0.27 0.61 1.15

No. of lost time claims 0 2 2

Rate per 100 FTE 0 0.61 0.57

No. of claims exceeding 13 weeks 0 1 2

Rate per 100 FTE 0

Fatalities Fatality claims 0

Claim costs Average cost per standard claim 3 $1,873 $11,941 $10,224

Return to work (RTW)

Percentage of claims with RTW Plan <30 days 100% 50% 84%

Consultation and participation

Evidence of agreed structure of designated workgroups (DWGs), health and safety representatives (HSRs), and issue resolution procedures (IRPs)

Completed Completed Completed

Compliance with agreed structure on DWGs, HSRs, and IRPs

Completed Completed Completed

Risk management

Percentage of workplace inspections completed 4 65% 78% 72%

No. of AS4801 external audit recommendations 4 4 4

Percentage of AS4801 external audit recommendations actioned

100% 100% 100%

Training Percentage of managers and staff that have received OH&S training:

5

•induction 10% n/a n/a

•management training 5% n/a n/a

•contractors, temps, and visitors 10% n/a n/a

Percentage of HSRs trained: 6

•acceptance of role 100% n/a n/a

•retraining (refresher) 40% n/a n/a

•reporting of incidents and injuries 25% n/a n/a

1. Incidents data sourced from EPA’s internal system, EPASS, as at 30 June 2015.2. Data sourced from the Victorian WorkCover Authority as at 30 June 2015.3. Reduction from previous years relates to three standard claims in the period with low medical costs and no lost time.4. EPA reviewed its inspection schedule program during the year resulting in reducing the number of inspections between April and June 2015.5. In 2014 EPA conducted review of all OH&S training. New modules have been developed and will be launched in early 2015–16.6. EPA conducted elections for Health and Safety Representatives in all designated work groups in February 2015. Training will encompass

the new modules referred to in note 5.

Table 8.2: EPA premium rate

Notes 2015 2014 2013

Premium rate 1 0.7580% 0.5918% 0.5620%

1. EPA’s premium rate is based on performance in previous years. The increase is due to the cost of three claims in previous years. EPA expects its improved performance in 2014–15 to be reflected in a reduction in future premium rates.

Employment and conduct principles

EPA is committed to applying best practice principles when appointing and retaining its people. Processes reflect and conform to Section 8 of the Public Administration Act 2004 ensuring decisions are based on merit, fairness, equity and freedom from discrimination.



Values and employment principlesEPA continues to review policies that underpin its workforce strategies. Policies focus on upholding public sector conduct and values, managing and valuing diversity and creating a safe and healthy workplace for its employees.

All EPA employees are covered by the Victorian Public Service Workplace Determination 2012, except for executives who hold individual employment contracts under the Public Administration Act 2004.

Comparative workforce dataTable 9.1: Full-time equivalent (FTE) staffing trends from 2011 to 2015

2015 2014 2013 2012 2011

FTE 341 312 325 364 419

Table 9.2: Summary of employment in June of 2014 and 2015

Ongoing employees

Fixed-term and casual employees

Employees (headcount)

Full time (headcount)

Part time (headcount)

FTE FTE

June 2015 337 264 73 307.59 33.5

June 2014 327 263 64 301.54 10

Table 9.3: Details of employment levels in June of 2014 and 2015

2015 2014

OngoingFixed-term and

casual employees OngoingFixed-term and

casual employees

Employees (headcount) FTE FTE

Employees (headcount) FTE FTE

Gender:

Male 150 147.22 14.5 143 141.50 7

Female 187 160.37 19 184 160.04 3

Total 337 307.59 33.5 327 301.54 10

Age

Under 25 1 1 1 0 0 0

25–34 78 72.84 15.1 87 82.29 3

35–44 136 119.61 13.4 123 107.05 4

45–54 74 69.14 4 68 65.6 3

55–64 47 44.4 0 49 46.6 0

Over 64 1 0.6 0 0 0 0

Total 337 307.59 33.5 327 301.54 10

Classification

VPS Grade 2 4 3.7 0 5 4.7 0

VPS Grade 3 73 68.58 10.8 61 57.32 3

VPS Grade 4 114 103.36 13.9 115 105.63 1

VPS Grade 5 104 94.17 5.8 102 92.99 1

VPS Grade 6 35 31.58 3 42 39.9 1

STS 2 1.2 0 2 1 0

Executive Officer 5 5 0 0 0 4

Total 337 307.59 33.5 327 301.54 10

9. WORKFORCE DATA

27

Diversity and inclusion plan

EPA is working towards to creating a balanced working environment where equal opportunity and diversity are valued. As part of the diversity and inclusion plan EPA will implement training to improve staff awareness of Aboriginal culture. As this is the first year that EPA is reporting on workforce diversity, the following table outlines EPA’s target for the 2015-16 financial year. EPA will report on its actual progress against this target in future reports.

Diversity and inclusion plan initiative Target

Improve staff awareness of Aboriginal culture Training program delivered

Executive officer dataAn executive officer (EO) is defined as a person employed as a public service body head or other executive under Part 3, Division 5 of the Public Administration Act 2004. All figures in the following tables reflect employment levels at the last full pay period in June of the current and corresponding previous reporting year.

Table 9.4: Number of EOs classified into ‘ongoing’ and ‘special projects’

All Ongoing Special projects

Classification No. Var. No. Var. No. Var.

EO-1 1 0 1 0 0 0

EO-2 4 +4 4 +4 0 0

EO-3 1 -3 0 -4 1 +1

Total 6 +1 5 0 1 +1

Table 9.5: Breakdown of EOs into gender for ‘ongoing’ and ‘special projects’

Ongoing Special projects

Male Female Vacancies Male Female Vacancies

Classification No. Var. No. Var. No. No. Var. No. Var. No.

EO-1 1 0 0 0 0 0 0 0 0 0

EO-2 2 +2 2 +2 0 0 0 0 0 0

EO-3 0 -2 0 -2 0 1 +1 0 0 0

Total 3 0 2 0 0 1 1 0 0 0

Table 9.6: Reconciliation of executive numbers

2015 2014

Executives with remuneration over $100,000 (Financial Statement note 41) 5 4

Add

Vacancies (Table 9.5) 0 2

Executives employed with total remuneration below $100,000 0 0

Accountable officer (CEO) 1 1

less

Separations 0 2

Total executive numbers at 30 June 6 5



Victorian Industry Participation Policy Act 2003The Victorian Industry Participation Policy Act 2003 requires departments and public sector bodies to report on the implementation of the Victorian Industry Participation Policy (VIPP). Departments and public bodies are required to apply VIPP to all tenders over $3 million in metropolitan Melbourne and $1 million in regional Victoria.

Details of contracts commenced to which the VIPP applied are as follows: nil.

Government advertising expenditureThere were no advertising campaigns with a media spend of $150,000 or greater in 2014–15.

Consultancy expenditureDetails of consultancies (valued at $10,000 or greater)

In 2014–15, there were 22 consultancies where the total fees payable to the consultants were $10,000 or greater. The total expenditure incurred during 2014–15 in relation to these consultancies was $908,073 (excluding GST). Details of individual consultancies are outlined below.

Table 10.1: Details of consultancies (valued at $10,000 or greater)

Consultants Purpose of consultancyStart date End date

Total approved project fee

($ excl. gst)

Expenditure 2014–15

($ excl. gst)

Future expenditure ($ excl. gst)

Amcosh Pty ltd Sampling and analysis of asbestos

21/11/14 31/01/15 242,950 228,228 -

Cardno lane Piper Pty ltd

licence Modernisation Project: landfill licence Conditions

1/03/15 30/06/15 26,760 26,760 -

Cellar Door Digital Marketing Pty ltd

Cleaner Yarra and Bay website. Cleaner Yarra and Bay Usability Review Project startup

27/05/15 25/06/15 21,000 21,000 -

D&D Taxation Consulting

Private Ruling Request for the Australian Tax Office regarding fringe benefit with respect to car parking and car pool

1/07/14 1/08/14 8,400 10,920 -

Hydronumerics Pty ltd

Water quality analysis 1/09/14 1/03/15 30,960 30,960 -

Monash University

Collaborative research project

1/12/14 1/01/15 17,000 17,000 -

Monash University

Study drivers and barriers to leachate management by landfill operators

1/02/15 30/04/15 14,850 14,850 -

Parsons Brinckerhoff Australia Pl

Development of guidelines for subsurface injection

29/05/15 30/06/15 10,080 10,080 -

Price Waterhouse Coopers

Assess and quantify economic impacts of illegal disposal of industrial waste

1/05/15 30/09/15 132,803 66,401 66,401


Cost and Capacity Review 1/04/15 31/08/15 113,636 34,091 79,545

10. OTHER DISClOSURES

29

Consultants Purpose of consultancyStart date End date

Total approved project fee

($ excl. gst)

Expenditure 2014–15

($ excl. gst)

Future expenditure ($ excl. gst)


EPA future funding options 15/05/15 31/08/15 17,793 8,896 8,896

Quantum Market Research

Social research 2/09/13 30/12/16 849,400 120,041 284,466

Roberts Evaluation Pty ltd

Evaluation - small-scale illegal dumping

6/10/14 15/12/14 33,150 33,150 -

Roberts Evaluation Pty ltd

Analysis of EPA's Hazelwood Recovery Program engagement activities

22/04/15 30/06/15 72,045 72,045 -

Senversa Advice on Merindah Park Review RBRC and additional advice

1/10/13 1/06/15 36,364 20,000 -

Senversa Water SEPP Review - literature review of groundwater science component

28/04/15 30/06/15 70,155 70,155 -

Senversa Review of the Draft Auditor Model Statement Conditions

25/05/15 30/06/15 16,865 16,865 -

University of Tasmania

Expert advice on the environmental impact of Hazelwood mine fire, part of an ongoing investigation

4/03/15 31/12/15 22,300 22,300 -

Uniquest Pty ltd Expert advice on the environmental impact of Hazelwood mine fire, part of an ongoing investigation

26/10/14 n/a 36,364 19,200 -

URS Australia Pty ltd

Audit Report Review 13/05/15 30/06/15 22,726 21,770 -

Victorian Government Solicitor's Officer

EPA Register of Statutory Powers

1/06/15 19/06/15 24,000 24,000 -

Total 1,886,561 908,073 486,909

Details of consultancies under $10,000

In 2014–15 there were seven consultancies engaged during the year where the total fee payable to the individual consultancies was less than $10,000. The total expenditure incurred during 2014–15 in relation to these consultancies was $40,685 excluding GST.

Disclosure of major contracts

EPA did not enter into any contract over $10 million in value during 2014–15.

Table 10.1: Details of consultancies (valued at $10,000 or greater) Continued



Freedom of InformationThe Freedom of Information Act 1982 allows the public a right of access to documents held by the Authority. For the 12 months ending 30 June 2015, the Authority received 69 applications. Of these requests, four were from Members of Parliament and journalists, and the remainder were from the general public. Of the total requests received by the Authority, the majority were acceded to, but two went to internal review with nil progressing to appeal stage.

Making a request

Access to information under Freedom of Information (FOI) is obtainable through a written request, as detailed in section 17 of the Act. Applications must be as detailed and specific as possible so that the EPA FOI officer can identify and locate relevant documents. All applications must include the statutory $26.50 Application Fee (from 1 July 2014). This fee does not include the costs for the provision of access to the requested material.

A Freedom of Information request can be made by writing to:

The Freedom of Information Officer

EPA Victoria GPO Box 4395 Melbourne VIC 3001

Requests can also be lodged online at www.foi.vic.gov.au

Compliance with the Building Act 1993EPA does not own or control any buildings. However, it complies with the building and maintenance provision of the Building Act 1993 to the extent that it is responsible as a tenant in leased premises.

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

Compliance with the Protected Disclosure Act 2012 (formerly the Whistleblowers Protection Act 2001)The Protected Disclosure Act 2012 encourages and assists people in making disclosures of improper conduct by public officers and public bodies. The Act provides protection to people who make disclosures in accordance with the Act and establishes a system for the matters disclosed to be investigated and for rectifying action to be taken.

EPA does not tolerate improper conduct by employees, or the taking of reprisals against those who come forward to disclose such conduct. It is committed to ensuring transparency and accountability in its administrative and management practices and supports the making of disclosures that reveal corrupt conduct, conduct involving a substantial mismanagement of public resources, or conduct involving a substantial risk to public health and safety or the environment.

EPA will take all reasonable steps to protect people who make such disclosures from any detrimental action in reprisal for making the disclosure. It will also afford natural justice to the person who is the subject of the disclosure to the extent it is legally possible.

Reporting procedures

A protected disclosure that relates to EPA can be made by contacting EPA or Independent Broad-based Anti-corruption Commission (IBAC) Victoria using the contact details below.

Protected Disclosures Coordinator

EPA Victoria PO Box 4395 Melbourne Victoria 3001 Telephone: 03 9695 2798 Email: [email protected]

Independent Broad-based Anti-corruption Commission (IBAC) Victoria

Address: level 1, North Tower, 459 Collins Street, Melbourne Victoria 3001. Mail: IBAC, GPO Box 24234, Melbourne Victoria 3000 Internet: www.ibac.vic.gov.au Phone: 1300 735 135

Email: (see website above for the secure email disclosure process, which also provides for anonymous disclosures).

Further information

The procedure for making and handling protected disclosures is available on EPA’s website.

10. OTHER DISClOSURES CONTINUED

31

Table 10.2: Disclosures under the Protected Disclosure Act 2012

2014–15 number

2013–14 number

The number of disclosures made by an individual to the EPA and notified to the Independent Broad-based Anti-corruption Commission

0 0

Assessable disclosures 1 0

Office-based environmental impactsEPA’s Environment Management System has been established to reduce the Authority’s impact on the environment. The system is supported by a staff-run working group, called Green Stars, who organise initiatives that promote environmental awareness including ‘ride to work’ and ‘walk to work’ day.

EPA’s greenhouse gas inventory has been prepared using the National Greenhouse Accounts Factors recently updated by the Australian Government’s Department of Environment.

Energy

EPA consumes energy for a number of different uses including office facilities and research and development facilities. The data represented below was collected through energy retailer billing information.

Table 10.3: Energy use

Indicator 2014–15 2013–14

ElectricityNatural

gasGreen power Electricity

Natural gas

Green power

Total energy usage segmented by primary source (MJ)

6,131,657 14,127,588 164,015 4,537,043 18,860,427 33,636

Greenhouse gas emissions associated with energy use, segmented by primary source and offsets (tCO

2e)

1,700 451 1,664 497

Percentage of electricity purchased as green power

3% 1%

Units of energy used per FTE (MJ/FTE) 17,977 41,419 481 14,563 60,539 108

Units of energy used per unit of office area (MJ/m2)

583 1,343 16 431 1,792 3

Energy targets

EPA’s Sustainability Plan sets objectives for achievement by June 2016. Progress on energy-related targets is outlined below.

Table 10.4: Current performance against Sustainability Plan targets for energy use

Measure June 2016 target Current progress

Energy (electricity) use per m2 per year 550 MJ 583 MJ

EPA continued its behaviour change initiatives to ensure staff maximise the energy saving potential in EPA offices and with equipment. This includes turning off computers at the power point and the use of energy efficient office heating, cooling and lighting where possible.



Waste

The waste generated by EPA is divided into landfill, recycling (including paper, cardboard, e-waste and stationary) and compost (organics recycling).

Table 10.5: Waste

Indicator 2014–15 2013–14

LandfillCommingled

recycling Compost LandfillCommingled

recycling Compost

Total units of waste disposed of by destination (kg/yr)

2,551 12,606 4,831 2,551 13,934 5,009

Units of waste disposed of per FTE by destinations (kg/FTE)

7.48 32.56 14.16 8.17 44.66 16.05

Recycling rate (percentage of total waste)

87% 88%

Greenhouse gas emissions associated with waste disposal (tCO

2e)

2.96 3.15

Waste targets

EPA’s Sustainability Plan sets objectives for achievement by June 2016. Progress on waste-related targets is outlined below.

Table 10.6: Current performance against Sustainability Plan targets for waste


Waste generated per FTE per year 60 kg 59 kg

EPA uses internal signage and communications to encourage reduced waste and to increase the recycling of organic materials.

Paper

EPA aims to reduce its paper use per FTE by June 2016. Initiatives include the introduction of ‘swipe printing’ that requires staff to confirm print jobs with their identification cards.

Table 10.7: Paper use

Indicator 2014–15 2013–14

Total units of copy paper used (reams) 2,435 2,118

Units of copy paper used per FTE (reams/FTE) 7.1 6.8

Percentage of 75–100% recycled content copy paper purchased 98.81% 95.22%



Paper use targets

EPA’s Sustainability Plan sets objectives for achievement by June 2016. Progress on paper-related targets is outlined below.



Reams of A4-equivalent paper used per FTE per year 5.0 7.1


33

An increase in EPA paper use per FTE has been offset by an increase in percentage of recycled content copy paper purchased. In addition to swipe printing, senior leadership is equipped with tablets and EPA staff can bring their own portable electronic devices to access the secure network at the Head Office location in Carlton.

Water

The data in the table below is based on water meter readings at all metropolitan and regional offices.

Table 10.9: Water use (office facilities only)

Indicator 2014–15 2013–14

Total units of metered water consumed by usage types (kilolitres) 5,489 6,199

Units of metered water consumed in offices per FTE (kilolitres/FTE) 16.09 19.90

Units of metered water consumed in offices per unit of office area (kilolitres/m2) 0.52 0.59

Water use targets

EPA’s Sustainability Plan sets objectives for achievement by June 2016. Progress on water-related targets is outlined below.



Water use per year (kilolitres/m2) 0.28 0.52

EPA’s Head Office location in Carlton has a 3.5 Star NABERS rating for base building water. Good water use is practiced by EPA staff and water efficient appliances are used wherever it is practical to do so.

Transport

EPA’s vehicle fleet comprises 61 vehicles, 92 per cent of which are operational vehicles, and the remainder executive fleet. Of the operational fleet, 34 per cent are lPG, seven per cent are four cylinder petrol-fuelled, 12 per cent are six cylinder petrol-fuelled, 33 per cent are six cylinder diesel-fuelled and 14 per cent are hybrid. The executive fleet comprised of 80 per cent six cylinder petrol-fuelled and 20 per cent diesel vehicles.

Table 10.11: Transport

2014–15 2013–14

Operational vehicles

4 cyl diesel

van 6 cyl 4WD

4 cyl diesel

van 6 cyl 4WD

Total energy consumption by vehicles (MJ) 977,450 1,684,215 141,012 399,157 1,908,993 398,586

Total vehicle travel associated with entity operations (km)

350,422 431,574 38,759 128,910 526,539 104,923

Total greenhouse gas emissions from vehicle fleet (tCO

2e)

70 118 11 30 134 30

Greenhouse gas emissions from vehicle fleet per 1,000 km travelled (tCO

2e)

0.21 0.28 0.33 0.23 0.25 0.28

Air travel 2014–15 2013-14

Total distance travelled by aeroplane (km) 466,575 579,761

Travel to work CBD Metro Regional CBD Metro Regional

Percentage of employees regularly (>75 per cent of work attendance days) using public transport, cycling, walking, or car pooling to and from work or working from home, by locality type

84% 21% 19% 86% 38% 24%



Transport targets

EPA’s Sustainability Plan sets objectives for achievement by June 2016. Progress on transport-related targets is outlined below.

Table 10.12: Current performance against Sustainability Plan targets for transport


Increase in fuel efficiency of vehicle fleet 10% 5%

Increase in use of public transport for work purposes 10% -17%

A survey of EPA staff revealed a decrease in the proportion of people commuting using public transport, cycling or walking. The result is mostly due to staff in regional or outer metropolitan offices being more likely to drive to work.

Greenhouse gas emissions

The table below summarised EPA’s greenhouse gas emissions from the sources discussed in tables 10.3 to 10.12.

Table 10.13: Greenhouse gas emissions

Indicator 2014–15 2013–14

Total greenhouse gas emissions associated with energy use (tCO2e) 2,152 2,213

Total greenhouse gas emissions associated with vehicle fleet (tCO2e) 191 238

Total greenhouse gas emissions associated with air travel (tCO2e) 115 165

Total greenhouse gas emissions associated with waste production (tCO2e) 2.96 3.00

Greenhouse gas emissions offsets purchased (tCO2e) 3,200 3,200

Greenhouse gas emissions targets

EPA’s Sustainability Plan sets objectives for achievement by June 2016. Progress on energy related targets is below.

Table 10.14: Current performance against Sustainability Plan targets for greenhouse gas


Reduction in greenhouse gas emissions since 2009–10 15% 37%

EPA invests in voluntary carbon offsets to ensure it is carbon neutral.

Procurement

EPA continued to focus on stationery, cleaning, paper, catering and venue hire purchasing to minimise its environmental impact. EPA also continued to use ecologically sustainable design guidelines for new buildings or office fit-outs. Examples of how EPA has incorporated environmental considerations into procurement decisions are:

• 50 per cent of stationery purchased is made of recycled product

• 100 per cent of computer screens are lCD

• 30 per cent of printers, multifunction devices and photocopiers, including portable printers that enable onsite printing of inspections reports, have duplex capacity.

Figure 10.1: Total gross greenhouse gas emissions (tCO2e).


2009-10

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2010-11 2011-12 2012-13 2013-14 2014–15

4,537

3,871

3,244 3,210 3,0402,985

35

Other information available on requestInformation listed below (as per the Financial Reporting Directive 22B of the Financial Management Act 1994) is held at EPA’s head office in Melbourne, located at 200 Victoria Street, Carlton, and is available on request, subject to the Freedom of Information Act 1982:

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

• details of publications produced by EPA about itself, and where they can be obtained

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

• details of any major external reviews carried out in respect of the operation of EPA

• details of major research and development activities undertaken by EPA

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

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

• details of assessments and measures undertaken to improve occupational health and safety of employees not otherwise detailed in the report of operations

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

• a list of major committees sponsored by EPA, the purpose of each committee, and the extent to which the purposes have been achieved

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

In addition, EPA confirms that:

• declarations of pecuniary interests have been duly completed by all relevant officers of EPA.

Risk attestationI, Cheryl Batagol, certify that the Environment Protection Authority Victoria has complied with the mandatory requirements of the Victorian Government Risk Management Framework and Ministerial Standing Direction 4.5.5. The Environment Protection Authority Victoria’s Risk and Audit Committee verifies this.




Compliance with the DataVic Access PolicyConsistent with the DataVic Access Policy issued by the Victorian Government in 2012, the information included in this Annual Report will be available at http://data.vic.gov.au/ in machine readable format. Data tables from EPA’s 2013-14 Annual Report are currently available on the DataVic website.



EPA’s Annual Report is prepared in accordance with all relevant Victorian legislations and pronouncements. This index has been prepared to facilitate identification of EPA's compliance with statutory disclosure requirements.

Legislation Requirement Page reference

Ministerial Directions

Report of operations – FRD guidance

Charter and purpose

FRD 22F Manner of establishment and the relevant Ministers 6

FRD 22F Purpose, functions, powers and duties 6

FRD 8C Departmental objectives, indicators and outputs n/a for departments only

FRD 22F Initiatives and key achievements 7–19

FRD 22F Nature and range of services provided 3

Management and structure

FRD 22F Organisational structure 23

Financial and other information

FRD 8C, SD 4.2(k)

Performance against output performance measures 18

FRD 8C Budget portfolio outcomes n/a for departments only

FRD 10 Disclosure index 36-37

FRD 12A Disclosure of major contracts 28

FRD 15B Executive officer disclosures 27

FRD 22F Employment and conduct principles 26

FRD 22F Occupational Health and Safety Policy 24

FRD 22F Summary of the financial results for the year 20-21

FRD 22F Significant changes in financial position during the year 20-21

FRD 22F Major changes or factors affecting performance 20-21

FRD 22F Subsequent events 20-21

Financial Report

FRD 22F Application and operation of Freedom of Information Act 1982 30

FRD 22F Compliance with building and maintenance provisions of Building Act 1993 30

FRD 22F Statement on National Competition Policy 30

FRD 22F Application and operation of the Protected Disclosure 2012 30

FRD 22F Application and operation of the Carers Recognition Act 2012 n/a for departments only

FRD 22F Details of consultancies over $10,000 28-29

FRD 22F Details of consultancies under $10,000 29

FRD 22F Statement of availability of other information 35

FRD 24C Reporting of office based environmental impacts 31-34

FRD 25B Victorian Industry Participation Policy disclosures 28

FRD 29A Workforce Data disclosures 26-27

SD 4.5.5 Risk management compliance attestation 35

Ministerial Directions Continued

11. DISClOSURE INDEx

37

Legislation Requirement Page reference

Financial Report

SD 4.2(g) Specific information requirements 7-20

SD 4.2(j) Sign off requirements 2

Financial statements required under Part 7 of the FMA

SD4.2(a) Statement of changes in equity 43

SD4.2(b) Operating statement 41

SD4.2(b) Balance sheet 42

SD4.2(b) Cash flow statement 44

Other requirements under Standing Directions 4.2

SD4.2(c) Compliance with Australian accounting standards and other authoritative pronouncements

46

SD4.2(c) Compliance with Ministerial Directions 46

SD4.2(d) Rounding of amounts 54

SD4.2(c) Responsible Body, Accountable Officer and Chief Finance and Accounting Officer declaration

38

SD4.2(f) Compliance with Model Financial Report [Entities to determine as appropriate]

46

Other disclosures as required by FRDs in notes to the financial statements

FRD 9A Departmental Disclosure of Administered Assets and liabilities by Activity 56

FRD 11A Disclosure of Ex Gratia Expenses 80

FRD 13 Disclosure of Parliamentary Appropriations 56

FRD 21B Disclosures of Responsible Persons, Executive Officers and other Personnel (Contractors with Significant Management Responsibilities) in the Financial Report

80

FRD 102 Inventories n/a

FRD 103E Non-financial Physical Assets 65

FRD 104 Foreign Currency n/a

FRD 106 Impairment of Assets 59

FRD 109 Intangible Assets 64

FRD 107A Investment Properties n/a

FRD 110 Cash Flow Statements 44

FRD 112D Defined Benefit Superannuation Obligations 69

FRD 113 Investments in Subsidiaries, Jointly Controlled Entities and Associates n/a

FRD 114A Financial Instruments – General Government Entities and Public Non-financial Corporations

71-78

FRD 119A Transfers through Contributed Capital n/a

Legislation

Freedom of Information Act 1982 30

Building Act 1993 30

Protected Disclosure Act 2001 30

Carers Recognition Act 2012 n/a

Victorian Industry Participation Policy Act 2003 28

Financial Management Act 1994 46




12. CERTIFICATION OF FINANCIAl STATEMENTS

Responsible Body, Accountable Officer and Chief Finance and Accounting Officer declaration

We certify that the attached financial statements for the Environment Protection Authority have been prepared in accordance with Standing Direction 4.2 of the Financial Management Act 1994, applicable Financial Reporting Directions, Australian accounting standards including interpretations, and other mandatory professional reporting requirements.

We further state that, in our opinion, the information set out in the Comprehensive Operating Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and notes forming part of the financial statements, presents fairly the financial transactions during the year ended 30 June 2015 and financial position of the Authority as at 30 June 2015.

At the time of signing, we are not aware of any circumstance which would render any particulars included in the financial statements to be misleading or inaccurate.

We authorise the attached financial statements for issue on 31 August



Responsible Body




Accountable Officer


Matthew Dale Chief Financial Officer


Chief Accounting and Finance Officer



39

40 EPA ANNUAl REPORT 2014–201540 EPA ANNUAl REPORT 2014–2015



41

($ thousand)

Notes 2015 2014

Continuing operations

Income from transactions

Revenue 4(a) 245,012 210,472

Other income - grants 4(b) 6,559 8,087

Total income from transactions 251,571 218,559

Expenses from transactions

Employee expenses 5(a) (37,185) (32,835)

Grants and other expense transfers 5(b) (58,137) (68,559)

Depreciation and amortisation 5(c) (4,563) (4,495)

Interest expense 5(d) (84) (100)

Other operating expenses 5(e) (21,315) (26,845)

Total expenses from transactions (121,284) (132,834)

Net result from transactions (net operating balance) 130,287 85,725

Other economic flows included in net result

Net gain/(loss) on non-financial assets 6(a) 153 77

Net gain/(loss) on statutory receivables 6(b) (1,344) (1,656)

Net gain/(loss) on landfill levy receivables 6(b) (4) (4,418)

Net gain/(loss) on financial instruments 6(c) (1,052) 2,317

Other gains/(losses) from other economic flows 6(d) 230 (140)

Total other economic flows included in Net result (2,017) (3,820)

Net result 128,270 81,905

Comprehensive result 128,270 81,905

The comprehensive operating statement should be read in conjunction with the accompanying notes included in the financial statements.

14. COMPREHENSIVE OPERATING STATEMENT FOR THE FINANCIAl YEAR ENDED 30 JUNE 2015


41



($ thousand)

Notes 2015 2014

Assets

Financial assets

Cash and cash equivalents 20(a) 275,140 165,365

Managed Investment Fund 19.7 191,265 192,317

Receivables 7 96,429 81,801

Total financial assets 562,834 439,483

Non-financial assets

Property, plant and equipment 8 16,114 18,485

Intangible assets 9 14,939 15,297

Non-financial assets classified as held-for-sale 10 0 34

Other non-financial assets 11 205 389

Total non-financial assets 31,258 34,205

Total assets 594,092 473,688

Liabilities

Borrowings 12 1,524 1,410

Payables 13 7,765 13,702

Provisions 14 12,746 15,101

Total liabilities 22,035 30,213

Net assets 572,057 443,475

Equity

Accumulated surplus 557,811 429,541

Contributed capital 11,467 11,155

Physical asset revaluation surplus 21 2,779 2,779

Net worth 572,057 443,475

Commitments for expenditure 17

Contingent liabilities and contingent assets 18

Subsequent events 26

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

15. BAlANCE SHEET AS AT 30 JUNE 2015


4343


($ thousand)

Notes

Physical asset revaluation

surplusAccumulated

surplusContribution

by Owner Total

Balance as at 1 July 2013 2,779 347,636 11,155 361,570

Net result for the year - 81,905 - 81,905

Balance at 30 June 2014 2,779 429,541 11,155 443,475

Net result for the year - 128,270 312 128,582

Balance at 30 June 2015 2,779 557,811 11,467 572,057

Subsequent events 26 The statement of changes in equity should be read in conjunction with the accompanying notes included in the financial statements.

16. STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAl YEAR ENDED 30 JUNE 2015



($ thousand)

Notes 2015 2014

Cash flows from operating activities

Receipts

Receipts from Government 874 22,476

Receipts from other entities 230,216 232,127

Goods and services tax recovered from the ATO 3,866 5,124

Interest received 5,174 4,604

Total receipts 240,130 264,331

Payments

Payments of grants and other transfers (58,137) (68,559)

Payments to suppliers and employees (71,347) (76,122)

Goods and services tax paid to the ATO (565) (253)

Interest and other costs of finance paid (84) (100)

Total payments (130,133) (145,034)

Net cash flows from operating activities 20(b) 109,997 119,297

Cash flows from investing activities

Proceeds/Payments from/(for) financial assets 1,052 (192,317)

Payments for non-financial assets (1,160) (3,411)

Proceeds from sale of non-financial assets 34 20

Net cash flows from/(used in) investing activities (74) (195,708)

Cash flows from financing activities

Owner's contribution from state 312 -

Repayment of finance leases (460) (484)

Net cash flows from/(used in) financing activities (148) (484)

Net increase/(decrease) in cash and cash equivalents 109,775 (76,895)

Cash and cash equivalents at beginning of the financial year 165,365 242,260

Cash and cash equivalents at end of the financial year 20(a) 275,140 165,365

The above cash flow statement should be read in conjunction with the accompanying notes included in the financial statements.

17. CASH FlOW STATEMENT FOR THE FINANCIAl YEAR ENDED 30 JUNE 2015


4545


18. INDEx TO NOTES TO THE FINANCIAl STATEMENTS

Notes Pages

1 Summary of significant accounting policies p. 46-55

2 Authority (controlled) outputs p. 56

3 Administered (non-controlled) items p. 56

4 Income from transactions p. 57

5 Expenses from transactions p. 58

6 Other economic flows included in net result p. 59

7 Receivables p. 60

8 Property, plant and equipment p. 61-64

9 Intangible assets p. 64

10 Non-current assets classified as held-for-sale p. 65

11 Other non-financial assets p. 65

12 Borrowings p. 65

13 Payables p. 66

14 Provisions p. 67-68

15 Superannuation p. 69

16 leases p. 70

17 Commitments for expenditure p. 71

18 Contingent assets and contingent liabilities p. 71

19 Financial instruments p. 71-78

20 Cash flow information p. 78-79

21 Reserves p. 79

22 Ex-gratia payments p. 80

23 Responsible persons p. 80

24 Remuneration of executives p. 80-81

25 Remuneration of auditors p. 81

26 Subsequent events p. 81

27 Trust Fund disclosure p. 82-83

28 Glossary of terms p. 83-85



Note 1. Summary of significant accounting policies

The annual financial statements represent the audited general purpose financial statements for the Environment Protection Authority (the Authority) for the year ended 30 June 2015. The purpose of the report is to provide users with information about the Authority's stewardship of resources entrusted to it.

(a) Statement of compliance

These general purpose financial statements have been prepared in accordance with the Financial Management Act 1994 and applicable Australian Accounting Standards, including interpretations (AASs). AASs include Australian equivalents to International Financial Reporting Standards. In particular, they are presented in a manner consistent with the requirements of AASB 1049 Whole of Government and General Government Sector Financial Reporting.

The general purpose financial statements have been prepared on a going concern basis.

Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

To gain a better understanding of the terminology used in this report, a glossary of terms can be found in Note 28.

The annual financial statements were authorised for issue by the Chairman of EPA Victoria, CEO and CFO on 31 August 2015.

(b) Basis of accounting preparation and measurement

The accrual basis of accounting has been applied in the preparation of these financial statements whereby assets, liabilities, equity, income and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid.

These financial statements are presented in Australian dollars, the functional and presentation currency of the Authority.

In the application of AASs, management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments. The most significant management estimates relate to accrued revenue associated with levies, recycle rebates and contaminated land remediation works. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision, and future periods if the revision affects both current and future periods. Judgements made by management in the application of AASs that have significant effects on the financial statements and estimates, with a risk of material adjustments in the subsequent reporting period, are disclosed throughout the notes to the financial statements.

Consistent with AASB 13 Fair Value measurement, the Authority determines the policies and procedures for both recurring fair value measurements such as property, plant and equipment, and financial instruments and for non-recurring fair value measurements such as non-financial physical assets held for sale, in accordance with the requirements of AASB13 and relevant Financial Reporting Directions.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair measurement as a whole:

level 1 - quoted (unadjusted) market prices in active markets for identical assets or liabilities

level 2 - valuation techniques for which the lowest level input that is significant to fair value measurement is directly or indirectly observable

level 3 - valuation techniques for which the lowest level input that is significant to fair value measurement is unobservable

For the purpose of fair value disclosures, the Authority has determined classes of assets on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

In addition, the Authority determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest input that is significant to the fair value measurement as a whole) at the end of the reporting period.

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The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2015 and the comparative information presented for the year ended 30 June 2014.

(c) Reporting entity

The financial statements cover the Environment Protection Authority (the Authority) as an individual reporting entity. The Authority was established by the Environment Protection Act 1970. Its principal address is:

Environment Protection Authority Victoria 200 Victoria Street Carlton VIC 3053

The financial statements include all the controlled activities of the Authority.

A description of the nature of the Authority’s operations and its principal activities is included in the report of operations which does not form part of these financial statements.

Objectives and funding

The Authority's objectives are to protect, care for and improve our environment.

The Authority derives the majority of its revenue from Municipal and Industrial landfill levies and Prescribed Industrial Waste levies, litter fines and interest on investments.

Outputs of the Authority

Information about the Authority’s output activities, and the expenses, income, assets and liabilities which are reliably attributable to those output activities, is set out in the output activities schedule (Note 2). Information about expenses, income, assets and liabilities administered by the Authority are given in the schedule of administered expenses and income and the schedule of administered assets and liabilities (see Note 3).

Administered items

The Authority administers but does not control certain resources on behalf of the Crown. It is accountable for the transactions involving those administered resources, but does not have the discretion to deploy the resources for achievement of the Authority’s objectives. For these resources, the Authority acts only on behalf of the Crown. Administered resources are accounted for using the accrual basis of accounting.

Transactions and balances relating to these administered resources are not recognised as Authority income, expenses, assets or liabilities within the body of the financial statements, but are disclosed in Note 3. Except as otherwise disclosed, administered items are accounted for on the same basis and using the same accounting policies as for the Authority.

Funds held in trust

Other trust activities on behalf of parties external to the Victorian Government

The Authority has responsibility for transactions and balances relating to trust funds on behalf of third parties external to the Victorian Government. Income, expenses, assets and liabilities managed on behalf of third parties are not recognised in these financial statements as they are managed on a fiduciary and custodial basis, and therefore are not controlled by the Authority or the Victorian Government. These transactions and balances are reported in Note 3.

(d) Scope and presentation of financial statements

Comprehensive operating statement

The comprehensive operating statement comprises two components, being 'net result from transactions' (or termed 'net operating balance') and other economic flows included in the net result. The sum of the two represents the net result.

The net result is equivalent to profit or loss derived in accordance with AASs. This classification is consistent with the whole of government reporting format and is allowed under AASB 101 presentation of financial statements.

Balance Sheet

Assets and liabilities are presented in liquidity order with assets aggregated into financial assets and non-financial assets.

Current and non-current assets and liabilities (those expected to be recovered or settled beyond 12 months) are disclosed in the notes, where relevant.



Statement of changes in equity

The statement of changes in equity presents reconciliations of each non-owner and owner equity opening balance at the beginning of the reporting period to the closing balance at the end of the reporting period. It also shows separately changes due to amounts recognised in the comprehensive result and amounts recognised in other comprehensive income related to other non-owner changes in equity.

Cash flow statement

Cash flows are classified according to whether or not they arise from operating activities, investing activities, or financing activities. This classification is consistent with requirements under AASB 107 Statement of Cash Flows.

(e) Income from transactions

Income is recognised to the extent that it is probable that the economic benefits will flow to the entity and the income can be reliably measured at fair value.

Where applicable, amounts disclosed as income are net of returns, allowances, duties and taxes. All amounts of income over which the Authority does not have control are disclosed as administered income in the schedule of administered income and expenses (see Note 3).

Revenue

Revenue including land fill levies and prescribed industrial waste levies are recognised on an accrual basis in accordance with accounting standard AASB 118. levies received during the year are recorded against the year the revenue was earned. levies for which land fill operators have not submitted returns at the end of the financial year are recorded as accrued revenue.

Interest income

Interest income includes interest received on bank term deposits and other investments. Interest income is recognised using the effective interest method which allocates the interest over the relevant period.

Net realised and unrealised gains and losses on the revaluation of investments do not form part of income from transactions, but are reported as part of income from economic flows.

(f) Expenses from transactions

Expenses are recognised as they are incurred and reported in the financial year to which they relate.

Employee expenses

Refer to the Section in Note 1(k) regarding employee benefits.

These expenses include all costs related to employment (other than superannuation which is accounted for separately) including salaries, fringe benefits tax, leave entitlements, redundancy payments and WorkCover premiums.

Superannuation – State superannuation defined benefit plans

The amount recognised in the net result in relation to employer contributions for members of defined benefit superannuation plans is the employer contributions that are paid or payable to these plans during the reporting period.

The Department of Treasury and Finance (DTF) in their Annual Financial Statements recognise on behalf of the state as the sponsoring employer, the net defined benefit cost related to the members of these plans. Refer to DTF’s Annual Financial Statements for more detailed disclosures in relation to these plans.

Depreciation and amortisation

All plant and equipment that have a limited useful life are depreciated. Depreciation is calculated on a straight line basis, at rates that allocate the asset’s value, less any estimated residual value, over its estimated useful life.

leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period.

19. NOTES TO THE FINANCIAl STATEMENTS FOR THE FINANCIAl YEAR ENDED 30 JUNE 2015 CONTINUED


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The following useful lives of assets are used in the calculation of depreciation for both current and prior years:

Asset class Method Useful life

Buildings leasehold improvements straight line 10–25 years

Plant and equipment straight line 2–20 years

leased motor vehicles straight line 3–4 years

Where items of plant and equipment have separately identifiable components which are subject to regular replacement, those components are assigned separate useful lives distinct from the item of plant and equipment to which they relate.

Intangible produced assets with finite useful lives are amortised as an expense from transactions on a systematic (typically straight line) basis over the asset’s useful life. Amortisation begins when the asset is available for use, that is, when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each annual reporting period.

Intangible assets are measured at cost less accumulated amortisation and impairment. Capitalised software costs are amortised on a straight-line basis over their useful lives of 3 to 10 years for both current and prior years. The most recent significant addition is the SAP Customer Relationship Management System (SAP-CRM) which has been determined to have a useful life of 10 years.

Interest expense

Interest expense is recognised in the period in which it is incurred. Refer to glossary of terms in Note 28 for an explanation of interest expense items.

Grant and other expense transfers

Grants and other transfers to third parties (other than contribution to owners) are recognised as an expense in the reporting period in which they are paid or payable.

Other operating expenses

Other operating expenses generally represent the day-to-day running costs incurred in normal operations. These expenses comprise contracted services, agency costs, shared services management fees, occupancy costs, and supplies and services.

(g) Other economic flows included in net result

Other economic flows measure the change in volume or value of assets or liabilities that do not result from transactions.

Net gain/(loss) on non-financial assets

Net gain/(loss) on non -financial assets and liabilities includes realised and unrealised gains and losses as follows:

Revaluation gains/(losses) of non-current physical assets

Refer to accounting policy on property, plant and equipment, provided in Note 1(j) non-financial assets.

Disposal of non-financial assets

Any gain or loss on the sale of non-financial assets is recognised at the date that control of the asset is passed to the buyer and is determined after deducting from the proceeds the carrying value of the asset at that time.

Impairment of non-financial assets

The Authority's non-financial assets, including intangible assets, are assessed annually for indications of impairment.

If there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their possible recoverable amount. Where an asset’s carrying value exceeds its recoverable amount, the difference is written off as another economic flow, except to the extent that the write down can be debited to an asset revaluation surplus amount applicable to that class of asset.

It is deemed that, in the event of the loss of an asset, the future economic benefits arising from the use of the asset will be replaced unless a specific decision to the contrary has been made. The recoverable amount for most assets is measured at the higher of depreciated replacement cost and fair value less costs to sell. Recoverable amount for assets held primarily to generate net cash inflows is measured at the higher of the present value of future cash flows expected to be obtained from the asset and fair value less costs to sell.



Other gains/ (losses) from other economic flows

Other gains/(losses) from other economic flows include the gains or losses from the revaluation of the present value of the long-service leave liability due to changes in the bond interest rates.

(h) Administered income

Taxes, fines and regulatory fees

The Authority does not gain control over assets arising from taxes, fines and regulatory fees, except litter fines and prescribed industry waste levy, consequently no income is recognised in the Authority's financial statements. The Authority collects these amounts on behalf of the Crown. Accordingly, the amounts are disclosed as income in the schedule of administered items (see Note 3).

(i) Financial assets

Cash and deposits

Cash and deposits recognised on the balance sheet comprise cash on hand and cash at bank, deposits at call and those highly liquid investments (with an original maturity of three months or less), which are held for the purpose of meeting short-term cash commitments rather than for investment purposes, and readily convertible to known amounts of cash with an insignificant risk of changes in value.

Managed Investment Fund

Managed Investment includes funds deposited with the Victorian Funds Management Corporation Capital Stable Fund and is classified as non-current financial asset. The Fund invests in a combination of asset classes which include cash deposits, fixed term deposits and equities which are subject to movements in equity prices.

Receivables

Receivables include statutory and contractual amounts. Statutory receivables include amounts owing from the Victorian Government, debtors in relation to fines and regulatory fees, accrued land Fill levy and Prescribed Industrial Waste levy and GST input tax credits recoverable. Contractual receivables include debtors in relation to goods and services and accrued investment income.

Receivables are recognised initially at fair value and subsequently measured at amortised cost, using the effective interest method, less an allowance for any impairment.

A provision for doubtful receivables is made when there is objective evidence that the debts may not be collected and bad debts are written off when identified, mainly relating to litter fines based on historical collection patterns of debt referred to the Infringement Court.

Impairment of financial assets

The Authority assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. Objective evidence includes financial difficulties of the debtor, default payments and debts which are more than 90 days overdue. All financial assets, except those measured at fair value through profit or loss, are subject to annual review for impairment.

Bad and doubtful debts for financial assets are assessed on a regular basis. Those bad debts considered as written off by mutual consent are classified as a transaction expense. The bad debts not written off by mutual consent and allowance for doubtful receivables are classified as ‘other economic flows’.

In assessing impairment of statutory (non-contractual) financial assets which are not financial instruments, the Authority applies professional judgement in assessing materiality and using estimates, averages and computational shortcuts in accordance with AASB 136 Impairment of Assets.

Impairment of intangible assets

The Authority on an annual basis completes an impairment review of its intangible assets. The review takes the form of an analysis of the net cash flow position from the operating activities associated with the intangible assets.

(j) Non-financial assets

Non-financial assets classified as held-for-sale

Non-financial assets classified as held-for-sale are measured at the lower of the carrying amount and fair value less costs to sell, and are not subject to depreciation.



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(j) Non-financial assets Continued

Non-financial assets, disposal groups, and related liabilities are treated as current and classified as held-for-sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset’s sale is expected to be completed within 12 months from the date of classification.

Property, plant and equipment

All non-current physical assets are measured initially at cost and subsequently revalued at fair value less accumulated depreciation and impairment. More details about the valuation techniques and inputs used in determining the fair value of non-financial physical assets are discussed in Note 8 Property, plant and equipment.

The fair value of plant, equipment and vehicles, is determined by reference to the asset’s depreciated replacement cost. For plant, equipment and vehicles, existing depreciated historical cost is generally a reasonable proxy for depreciated replacement cost because of the short lives of the assets concerned.

Leasehold improvements

The cost of a leasehold improvement is capitalised as an asset and depreciated over the remaining term of the lease or the estimated useful life of the improvement, whichever is the shorter.

Non-current physical assets arising from finance leases

Refer to Note 1(l) leases.

Revaluation of non-current assets

Non-current physical assets are measured at fair value on a cyclical basis, in accordance with the Financial Reporting Directions (FRD 103F). A full revaluation normally occurs every five years, based on the asset’s government purpose classification, but may occur more frequently if fair value assessments indicate material changes in values. The majority of non-current assets held by the Authority are 'fit out' leasehold improvements to buildings. The depreciated cost of leasehold improvements is an acceptable approximation of fair value.

Revaluation increases or decreases arise from differences between an asset’s carrying value and fair value.

Net revaluation increases (where the carrying amount of a class of assets is increased as a result of a revaluation) are recognised in other comprehensive income and accumulated in equity under the revaluation surplus, except that the net revaluation increase is recognised in the net result to the extent that it reverses a net revaluation decrease in respect of the same class of property, plant and equipment previously recognised as an expense (other economic flows) in the net result.

Net revaluation decreases are recognised immediately as expenses (other economic flows) in the net result, except that the net revaluation decrease is recognised in other comprehensive income to the extent that a credit balance exists in the revaluation surplus in respect of the same class of property, plant and equipment. The net revaluation decrease recognised in other comprehensive income reduces the amount accumulated in equity under revaluation surplus.

Revaluation increases and decreases relating to individual assets within a class of property, plant and equipment, are offset against one another within that class but are not offset in respect of assets in different classes. Any revaluation surplus is not normally transferred to accumulated funds on de-recognition of the relevant asset.

Intangible assets

Intangible assets are initially recognised at cost. Subsequently, intangible assets with finite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. Costs incurred subsequent to initial acquisition are capitalised when it is expected that additional future economic benefits will flow to the Authority.

For software intangibles, when the recognition criteria in AASB 138 intangible assets are met (this criteria includes the asset having a significant future economic benefit which is reliably measured and represents development costs), internally generated intangible assets are recognised and measured at cost less accumulated depreciation/amortisation and impairment.

Other non-financial assets

Prepayments

Other non-financial assets include prepayments which represent payments in advance of receipt of goods or services or that part of expenditure made in one accounting period covering a term extending beyond that period.



Impairment of non-financial assets

Refer to Note 1(g) Other economic flows included in net result.

(k) Liabilities

Payables

Payables include contractual and statutory amounts. Contractual payables consist of accounts payable and other sundry liabilities. Statutory payables consist of financial assurance held to offset potential cleanup costs. Accounts payable represent liabilities for goods and services provided to the Authority prior to the end of the financial year that are unpaid, and arise when the Authority becomes obliged to make future payments in respect of the purchase of those goods and services.

Payables are initially recognised at fair value, being the cost of the goods and services, and subsequently measured at amortised cost.

Borrowings

Borrowings are initially measured at fair value, being the cost of the borrowings, net of transaction costs (refer to Note 1(l) leases).

Subsequent to initial recognition, borrowings are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in the net result over the period of the borrowing using the effective interest method.

Financial guarantees

Payments that are contingent under financial guarantee contracts are recognised as a liability at the time the guarantee is issued. The liability is initially measured at fair value, and if there is a material increase in the likelihood that the guarantee may have to be exercised, then it is measured at the higher of the amount determined in accordance with AASB 137 Provisions, contingent liabilities and contingent assets and the amount initially recognised less cumulative amortisation, where appropriate.

In the determination of fair value, consideration is given to factors including the overall capital management/prudential supervision framework in operation, the protection provided by the State Government by way of funding should the probability of default increase, probability of default by the guaranteed party and the likely loss to the Authority in the event of default.

The Authority has reviewed its financial guarantees and determined that there is no material liability to be recognised for financial guarantee contracts at 30 June 2015 and at 30 June 2014.

Provisions

Provisions are recognised when the Authority has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows, using a discount rate that reflects the time value of money and risks specific to the provision.

Employee benefits

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long-service leave for services rendered to the reporting date.

Wages and salaries, annual leave

liabilities for wages and salaries, including non-monetary benefits and annual leave are recognised in the provision for employee benefits as 'current liabilities', because the Authority does not have an unconditional right to defer the settlement of these liabilities.



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(k) Liabilities Continued

Depending on the expectation of the timing of the settlements, liabilities for wages and salaries and annual leave are measured at:

- undiscounted value - if the Authority expects to wholly settle within 12 months or;

- present value - if the Authority does not expect to wholly settle within 12 months.

Long-service leave

liability for long-service leave (lSl) is recognised in the provision for employee benefits.

Unconditional lSl is disclosed in the notes to the financial statements as a current liability even where the Authority does not expect to settle the liability within 12 months because it will not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months.

The components of this current lSl liability are measured at:

- undiscounted value – component that the Authority expects to settle within 12 months and;

- present value – component that the Authority does not expect to settle within 12 months.

Conditional lSl is disclosed as a non-current liability. There is an unconditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service. This non-current lSl liability is measured at present value.

Any gain or loss following revaluation of the present value of non-current lSl liability is recognised as a transaction, except to the extent that a gain or loss arises due to changes in the bond interest rates for which it is recognised as an other economic flow (refer to Note 1(g)).

Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Authority recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

Employee benefits on-costs

Employee benefits on costs such as payroll tax, workers' compensation and superannuation are recognised separately from the provision for employee benefits.

(l) Leases

A lease is a right to use an asset for an agreed period of time in exchange for payment.

leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and rewards incidental to ownership. leases of property, plant and equipment are classified as finance infrastructure leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership from the lessor to the lessee. All other leases are classified as operating leases.

Finance leases

Authority as lessee

At the commencement of the lease term, finance leases are initially recognised as assets and liabilities at amounts equal to the fair value of the lease asset or, if lower, the present value of the minimum lease payment, each determined at the inception of the lease. The lease asset is depreciated over the shorter of the estimated useful life of the asset or the term of the lease.

Minimum finance lease payments are apportioned between reduction of the outstanding lease liability, and periodic finance expense which is calculated using the interest rate implicit in the lease and charged directly to the comprehensive operating statement. Contingent rentals associated with finance leases are recognised as an expense in the period in which they are incurred.



Operating leases

Authority as lessee

Operating lease payments, including any contingent rentals, are recognised as an expense in the comprehensive operating statement on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern of the benefits derived from the use of the leased asset. The leased asset is not recognised in the balance sheet.

All incentives for the agreement of a new or renewed operating lease are recognised as an integral part of the net consideration agreed for the use of the leased asset, irrespective of the incentive’s nature or form or the timing of payments.

In the event that lease incentives are received to enter into operating leases, the aggregate cost of incentives are recognised as a reduction of rental expense over the lease term on a straight-line basis, unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(m) Equity

Contributions by owners

Additions to net assets which have been designated as contributions by owners are recognised as contributed capital. Other transfers that are in the nature of contributions or distributions have also been designated as contributions by owners.

During the course of the year, the Authority received $312,000 for rapid response air monitoring equipment from the Department of Environment, land, Water and Planning (DElWP) that has been reported as a contributed capital transfer as required by FRD 119A Transfers through Contributed Capital under the Financial Management Act 1994 (30 June 2014 Nil).

(n) Commitments

Commitments are disclosed at their nominal value and inclusive of the goods and services tax (GST) payable. In addition, where it is considered appropriate and provides additional relevant information to users, the net present values of significant individual projects are stated.

(o) Contingent assets and contingent liabilities

Contingent assets and contingent liabilities are not recognised in the balance sheet, but are disclosed by way of a note and, if quantifiable, are measured at nominal value. Contingent assets and liabilities are presented inclusive of GST receivable or payable respectively.

(p) Accounting for the Goods and Services Tax (GST)

Income, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.

(q) Rounding of amounts

Amounts in the financial statements have been rounded to the nearest thousand dollars, unless otherwise stated. Figures in the financial statements may not equate due to rounding.

(r) Changes in accounting policies

Subsequent to the 2014–15 reporting period, the consolidation suite of standards which includes AASB10 Consolidated Financial Statements, AASB11 Joint arrangements and AASB 12 Disclosure of Interest in other Entities were revised. In addition, AASB 127 Separate Financial Statements and AASB 128 Investment in Associates and Joint Ventures were also revised. All standards became effective for not-for-profit entities from 1 July 2014. The Authority has assessed the impact of the changes and has assessed there is no impact on the disclosure requirements of the Statements.



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(s) AASs issued that are not yet effective

Certain new AASs have been published that are not mandatory for the 30 June 2015 reporting period. DTF assesses the impact of these new standards and advises the Authority of their applicability and early adoption where applicable.

The table below highlights applicable Australian accounting standards that are issued but not effective for 2014–15 in accordance with paragraph 30 of AAS 108 Accounting Policies, Changes in Accounting Estimate and Errors

Standard/Interpretation Summary

Applicable for annual reporting periods beginning on

Impact on public sector entity financial statements

AASB 9 Financial instruments

The key changes include the simplified requirements for the classification and measurement of financial assets, a new hedging accounting model and a revised impairment loss model to recognise impairment losses earlier, as opposed to the current approach that recognises impairment when incurred.

1/01/2018 The assessment has identified that the financial impact of available for sale (AFS) assets will now be reported through other comprehensive income (OCI) and no longer recycled to the profit and loss. Detail of the impact is still being assessed by the Authority. Minimal impact is expected.

AASB 15 Revenue from contracts with customers

The core principle of AASB 15 requires an entity to recognise revenue when the entity satisfies a performance obligation by transferring a promised good or service to a customer.

1/01/2017

(Exposure draft 263- potential deferral to 1 January 2018)

The changes in revenue recognition requirements in AASB 15 may result in changes to the timing and amount of revenue recorded in the financial statements. The Standard will also require additional disclosure on service revenue and contract modifications. A potential impact will be the upfront recognition of revenue from licences that cover multiple reporting periods. Revenue that was deferred and amortised over a period may now need to be recognised immediately as a transitional adjustment against the opening retained earnings if there are no former performance obligations outstanding. Detail of the impact is still being assessed by the Authority. Minimal impact is expected as license fees are not paid over multiple reporting periods.

AASB 2014–4 Amendments to Australian Accounting Standards - Clarification of Acceptable Methods of Depreciation and Amortisation {AASB 116 & AASB 138}

Amends AASB 116 Property, Plant and Equipment and AASB 138 Intangible Assets to:

1) establish the principle for the basis of depreciation and amortisation as being the expected pattern of consumption of the future economic benefits of an asset

2) prohibit the use of revenue-based methods to calculate the depreciation or amortisation of an asset, tangible or intangible, because revenue generally reflects the pattern of economic benefits that are generated from operating the business, rather that the consumption through the use of the asset.

The Authority assessment has indicated that there is limited impact, as the revenue based method is not used for depreciation and amortisation.



Note 2. Authority (controlled) outputs

The Authority's sole output as defined in DTF's Budget Paper 3 is Statutory Activities and Environment Protection. All financial activities associated with this output are reported in the operating statement of the financial statements. Previous year's disclosures were reflective of the Authority's differing expenditure authorities (i.e. EPA Program, Environment Protection Trust, Treasury Trust and Financial Assurance Trust Fund) which are no longer applicable with the removal of the accrual based appropriation funding in 2011–12.

Note 3. Administered (non-controlled) items

In addition to the specific Authority operations which are included in the financial statements (balance sheet, comprehensive operating statement and cash flow statement), the Authority administers or manages other activities on behalf of the state. The transactions relating to these state activities are reported as administered items in this note. Administered transactions give rise to income, expenses, assets and liabilities and are determined on an accrual basis. Administered income includes taxes, fees and fines. Administered assets include government income earned but yet to be collected. Administered liabilities include government expenses incurred but yet to be paid. Both the Controlled Authority financial statement and these administered items are consolidated into the financial statements of the state.

($ thousand)

2015 2014

Administered income from transactions

Regulatory fees 14,933 16,251

Miscellaneous 2,264 2,565

Fines 481 205

User charges 252 244

Total administered income from transactions 17,930 19,265

Administered expenses from transactions

Payments into the consolidated fund (17,600) (19,027)

Total administered expenses from transactions (17,600) (19,027)

Administered net result from transactions (net operating balance) for the year 330 238

Administered other economic flows included in administered net result

Net gain/(loss) on receivables (90) (117)

Total administered other economic flows included in administered net result (90) (117)

Total administered comprehensive result for the year 240 121

Administered financial assets

Receivables 2,205 1,966

Total administered financial assets 2,205 1,966

Total administered assets 2,205 1,966

Administered liabilities

Unearned income (2) 0

Total administered liabilities (2) 0

Total administered net assets 2,207 1,966



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Note 4. Income from transactions

($ thousand)

2015 2014

(a) Revenue

Municipal & Industrial landfill levy 195,860 170,930

landfill levy penalty interest 9 16

licence levy 361 405

Prescribed Industrial Waste levy 27,392 23,264

Interest from financial assets – public sector 5,638 3,636

Interest from financial assets – non-public sector 9,561 7,800

litter fines 5,293 4,058

Miscellaneous 502 -

Environment audit fees 396 363

Total income from the Environment Protection Trust Fund 245,012 210,472

(b) Other Income

Grants from departments 6,559 4,022

Grants from other agency - 4,065

Total other income 6,559 8,087



Note 5. Expenses from transactions

($ thousand)

2015 2014

(a) Employee expenses

Salary and associated costs 34,249 30,234

Post employment benefits:

Defined contribution superannuation expense 2,575 2,235

Defined benefit superannuation expense 361 366

Total employee expenses 37,185 32,835

(b) Grants and other expense transfers

Grants to Victorian Government entities within portfolio 27,042 25,338

Grants to Victorian Government entities outside portfolio 1 500

Grants to external organisations 31,094 42,721

Total grants and other expense transfers 58,137 68,559

(c) Depreciation and amortisation

Depreciation:

Building leasehold improvements 1,004 995

Plant and equipment 1,027 1,090

Total depreciation 2,031 2,085

Amortisation:

Software (i) 2,107 1,949

Motor vehicles under lease 425 461

Total amortisation 2,532 2,410

Total depreciation and amortisation 4,563 4,495

(d) Interest expense

Interest on finance leases 84 100

Total interest expense 84 100

(e) Other operating expenses

Contracted services 5,643 7,979

Agency costs 2,587 5,643

Shared services management fee 2,116 2,103

Occupancy & utilities 1,856 1,825

Supplies and services 6,595 6,643

Victorian Auditor-General's Office - audit or review of the financial statements 53 51

Operating lease rental expenses:

lease payments 2,465 2,610

Total other expenses 21,315 26,845

(i) Includes amortisation costs relating to SAP-CRM of $1.97 million (2014 $1.82 million)



5959


Note 6. Other economic flows included in net result

($ thousand)

Notes 2015 2014

(a) Net gain/(loss) on non-financial assets

Net gain/(loss) on disposal of property, plant and equipment 153 77

Total net gain/(loss) on non-financial assets 153 77

(b) Net gain/(loss) on statutory receivables

Impairment of statutory receivables 22 (1,344) (1,656)

Impairment of landfill levy receivables (i) (4) (4,418)

Total net gain/(loss) on statutory receivables (1,348) (6,074)

(c) Net gain/(loss) on financial instuments

Net gain/(loss) on financial instruments (1,052) 2,317

Total net gain/(loss) on financial instruments (1,052) 2,317

(d) Other gains/(losses) from other economic flows

Net gain/(loss) arising from revaluation of long-service leave liability (ii) 283 (89)

Unwinding of provisions 14(b) (53) (51)

Total other gains/(losses) from other economic flows 230 (140)

(i) In December 2013, the Supreme Court handed down its final decision on the dispute with a landfill operator. The court ruled that the Authority’s decision to terminate the operators previous partial exemption from landfill levy on the Category C firewall soil was invalid. As a result of the court decision the Authority made an impairment adjustment of the outstanding debtor balance of $4.42 million.

(ii) Revaluation gain/(loss) due to changes in bond rates.



Note 7. Receivables

($ thousand)

2015 2014

Current receivables

Statutory

Amounts owing from State Government (i) 31,813 26,117

Fines and regulatory fees 7,951 7,637

Allowance for doubtful debts (See also Note 7(a) below) (2,316) (2,458)

GST Input tax credit recoverable 370 367

Accrued revenue - Environment Protection Fund (ii) & (iii) 53,025 46,080

90,843 77,743

Contractual

Trade debtors 3,418 2,343

Amounts owing from Commonwealth Government 261 854

Interest receivable 1,312 848

4,991 4,045

Total current receivables 95,834 81,788

Non-current receivables

Contractual

Amounts owing from Commonwealth Government 595 13

Total non-current receivables 595 13

Total receivables 96,429 81,801

Note:

(i) The amounts recognised from the Victorian Government represent funding for all commitments incurred through the Environment Protection Fund and are drawn from the Trust fund as the commitments fall due.

(ii) Accrued revenue comprises estimated landfill levy receipts (including Prescribed Industrial Waste) and accrued litter fines.

(iii) Accrued revenue includes amounts of levies which remain unpaid at 30 June 2015. Management has assessed these outstanding amounts and believes they are fully recoverable by the Authority.

(a) Movement in the provision for doubtful statutory receivables

($ thousand)

2015 2014

Balance at beginning of the year (2,458) (1,536)

Receivables written off during the year as uncollectible 1,486 734

Increase in provision recognised in the net result (1,344) (1,656)

Balance at end of the year (2,316) (2,458)

(b) Ageing analysis of contractual receivables

Please refer to Please refer to Table 19.3 in Note 19 for the ageing analysis of contractual receivables.

(c) Nature and extent of risk arising from contractual receivables

Please refer to Note 19 for the nature and extent of risks arising from contractual receivables.



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Note 8. Property, plant and equipment

Table 8.1: Classification by 'Public Safety and Environment' purpose group - gross carrying amounts and accumulated depreciation

($ thousand)

2015 2014

Buildings leasehold improvements

At fair value (i) 7,491 7,491

less: accumulated depreciation (2,689) (2,390)

At fair value (ii) 9,567 8,706


Total buildings leasehold improvements 10,483 10,625

Plant and equipment

At fair value (iii) 16,773 16,813


Total plant and equipment 3,548 3,972

Work-In-progress

At fair value 573 2,527

Total 573 2,527

Leased vehicles

At fair value (iii) 2,096 2,136

less: accumulated depreciation (586) (775)

Total leased vehicles 1,510 1,361

Net carrying amount of property, plant and equipment 16,114 18,485

Notes:

(i) During 2011–12 an independent valuation of the Authority's building leasehold assets at Macleod Centre for Applied Sciences was performed by Napier & Blakeley to determine the fair value of the building leasehold improvements that have been classified as level 2 . The valuation assumptions included envisaging reconstruction to a modern equivalent standard, removal and debris allowance, professional/council fees and ensuring any upgrade meets building Regulations standards. At the time of the valuation, no material variance existed between the carrying amount of the asset and the valuation.

(ii) Building improvements at Head Office and Gippsland are disclosed at fair value and amortised over the life of the lease.

(iii) The Authority measures items of plant and equipment and leased vehicles at cost on initial recognition as an asset. During the financial year, the Authority reviewed the fair value of plant and equipment and leased vehicles and it was determined that the fair value was not materially different to the depreciated replacement cost. Therefore the depreciated replacement cost has been considered as fair value for plant and equipment and leased vehicles as at 30 June 2015.



Note 8. Property, plant and equipment

Table 8.2: Classification by 'Public Safety and Environment' purpose group - movements in carrying amounts

($ thousand)

2015

Buildings leasehold

improvements at valuation &

fair value

Plant and equipment at

fair value

Leased vehicles at

fair valueWork-In-progress Total

Opening balance 10,625 3,972 1,361 2,527 18,485

Additions 862 607 931 573 2,973

Disposals 0 (4) (333) - (337)

Transfer to:

Other government department* - - (24) - (24)

Intangibles - - - (1,674) (1,674)

Building lease improvements (853) (853)

Plant and equipment - - - - 0

Depreciation (1,004) (1,027) (425) - (2,456)

Closing balance 10,483 3,548 1,510 573 16,114

2014

Opening balance 11,600 4,337 1,521 20 17,478

Additions 23 753 539 853 2,168

Disposals (3) (28) (207) - (238)

Transfer to:

non-financial assets held-for-sale - - (34) - (34)

Intangibles - - - 1,674 1,674

Plant and Equipment (20) (20)

Depreciation (995) (1,090) (458) - (2,543)

Closing balance 10,625 3,972 1,361 2,527 18,485

* Executive Officer motor vehicle was transferred to the Department Premier and Cabinet.

Table 8.3: Fair Value measurement hierarchy for assets as at 30 June 2015

($ thousand)

Carrying amounts as at 30 June 2015

Fair value measurement at the end of the reporting period using

Level 1 (i) Level 2 (i) Level 3 (i)

Buildings leasehold improvements 10,483 10,483


Leased vehicles 1,510 1,510

Carrying amounts as at 30 June 2014

Fair value measurement at the end of the reporting period using

Level 1 (i) Level 2 (i) Level 3 (i)

Buildings leasehold Improvements 10,625 10,625


Leased vehicles 1,361 1,361

(i) Classified in accordance with the fair value hierarchy see Note 1(b)

62 EPA ANNUAl REPORT 2014 – 2015



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Table 8.4: Reconciliation of level 3 fair value movements

($ thousands)

2015 Plants and equipment Leased vehicles

Opening Balance 3,972 1,361

Purchases 607 931

Disposals (4) (333)

Transfer in / (out) of level 3 - -

Gains or losses recognised in net result - -

Depreciation (1,027) (425)

Transfer - assets transfer - (24)

Closing Balance 3,548 1,510

2014 Plants and equipment Leased vehicles


Purchases 753 539

Disposals (28) (207)

Transfer in / (out) of level 3 - -

Gains or losses recognised in net result - -

Depreciation (1090) (458)

Transfer - assets held for sale - (34)

Closing Balance 3,972 1,361

Table 8.5: Description of significant unobservable inputs to level 3 valuations

2015Valuation technique

Significant unobservable inputs

Range (weighted average)

Sensitivity of fair value measurement to changes in significant unobservable inputs

Vehicles Depreciated replacement cost

Cost per unit $23,000 – $50,000 per unit ($37,000 average)

A significant increase or decrease in cost per unit would result in significantly higher or lower fair value.

Useful life of vehicles

3 – 4 years (3 years average)

A significant increase or decrease in the estimated useful life of the asset would result in a significantly higher or lower valuation.

Plant and equipment

Depreciated replacement cost






2014Valuation technique

Significant unobservable inputs

Range (weighted average)

Sensitivity of fair value measurement to changes in significant unobservable inputs

Vehicles Depreciated replacement cost






Plant and equipment

Depreciated replacement cost








Vehicles

Vehicles are valued using depreciated replacement cost method and therefore classified as level 3 in the Fair Value Hierarchy. The Authority acquires new vehicles and at times disposes of them before the end of their economic life. Depreciation rates set are reflective of expected utilisation of the vehicle.

Plant and equipment

Plant and equipment is held at fair value. When plant and equipment is specialised in use, such that is rarely sold other than as part of a going concern, fair value is determined using depreciated replacement cost method and therefore classified as level 3 in the fair value hierarchy.

There were no changes in valuation techniques throughout the period 30 June 2015. For all assets measured at fair value, the current use is considered the highest and best use.

Note 9. Intangible Assets

($ thousand)

2015 2014

Gross carrying amount at cost

Opening balance 19,177 19,285

Additions to software 1,748 198

Disposals of software (265) (306)

Closing balance 20,660 19,177

Accumulated amortisation and impairment

Opening balance (3,880) (2,219)

Amortisation expense (i) (2,106) (1,949)

Disposals 265 288

Closing balance (5,721) (3,880)

Net book value at the end of the financial year 14,939 15,297

Notes:

(i) Amortisation expense is included in the line item ‘depreciation and amortisation expense’ in the comprehensive operating statement.

Significant intangible assets

The Authority has previously capitalised the development of its SAP Customer Relationship Management System (SAP-CRM), The asset has a $14.6 million carrying amount (2014: $15.0 million). The system has been amortised over 10 years based on the expected useful life.



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Note 10. Non-current assets classified as held-for-sale

($ thousand)

2015 2014

Non-current assets

leased vehicles held-for-sale(i) - opening balance 34 54

Assets disposals (34) (20)

Total non-current assets classified as held-for-sale 0 34

Notes:

(i) leased vehicles held-for-sale represent motor vehicles identified for immediate disposal in their current condition through the

VicFleet disposal process. It is anticipated that these disposals will be completed within the next 12 months.

Note 11. Other non-financial assets

($ thousand)

2015 2014

Current other assets

Prepayments 205 389

Total current other assets 205 389

Total other non-financial assets 205 389

Note 12. Borrowings

($ thousand)

2015 2014

Current borrowings - secured

Finance lease liabilities (i) 575 725

Total current borrowings 575 725

Non-current borrowings - secured

Finance lease liabilities (i) 949 685

Total non-current borrowings 949 685

Total borrowings 1,524 1,410

Notes:

(i) Secured by the assets leased. Finance leases are effectively secured as the rights of the leased assets revert to the lessor in the event

of a default.

(a) Maturity analysis of borrowings

Please refer to Table 19.4 in Note 19 for the ageing analysis of borrowings.

(b) Nature and extent of risk arising from borrowings

Please refer to Note 19 for the nature and extent of risk arising from borrowings.

(c) Defaults and breaches

During the current and prior year, there were no defaults and breaches of any of the loans.



Note 13. Payables

($ thousand)

2015 2014

Current payables - unsecured

Contractual

Trade creditors 2,111 1,602

Accruals 3,167 9,997

Salaries and other employee entitlements 963 659

6,241 12,258

Statutory

Other payables - -

Total current payables 6,241 12,258

Non-current payables - unsecured

Contractual

Trade creditors 1,473 1,393

Statutory

Financial assurance cash deposits (i) 51 51

Total non-current payables 1,524 1,444

Total payables 7,765 13,702

Notes:

(i) Assurances are held to offset potential cleanup costs which may be incurred by the Authority. Clients have the option of lodging either cash deposits or bank guarantees. Note 19(e) shows details of bank guarantees held at 30 June 2015.

(a) Maturity analysis of contractual payables

Please refer to Table 19.4 in Note 19 for the ageing analysis of contractual payables.

(b) Nature and extent of risk arising from contractual payables

Please refer to Note 19 for the nature and extent of risk arising from contractual payables



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Note 14. Provisions

($ thousand)

Notes 2015 2014

Current provisions

Employee benefits - annual leave (i) 14(a) 3,033 2,886

Employee benefits - long-service leave:

Unconditional and expected to be settled within 12 months (i) 14(a) 544 518

Unconditional and expected to be settled after 12 months (i) 14(a) 3,388 3,042

6,965 6,446

Provisions related to employee benefit on-costs:

Unconditional and expected to be settled within 12 months (i) 14(a) 86 82

Unconditional and expected to be settled after 12 months (i) 14(a) 534 479

620 561

Site remediation and disposal of chemical stockpile & levy rebates (ii) 14(b) 1,324 6,095

Total current provisions 8,909 13,102

Non-current provisions

Employee benefits (i) 14(a) 907 804

Employee benefits on-costs (i) 14(a) 143 127

Site remediation and disposal of chemical stockpile (ii) 14(b) 1,704 38

Site restoration of leasehold improvement (i) 14(b) 1,083 1,030

Total non-current provisions 3,837 1,999

Total provisions 12,746 15,101

Notes:

(i) The amounts disclosed are discounted to present values.

(ii) The amounts disclosed are nominal amounts.

(a) Employee benefits and related on-costs

($ thousand)

2015 2014

Current employee benefits

Annual leave entitlements 3,033 2,886

long-service leave entitlements 4,552 4,121

Total current employee benefits 7,585 7,007

Non-current employee benefits

long-service leave entitlements 1,050 931

Total non-current employee benefits 1,050 931

Total employee benefits 8,635 7,938

Current on-costs 621 560

Non-current on-costs 143 127

Total on-costs 764 687

Total employee benefits and related on-costs 9,399 8,625



(b) Movements in other provisions

($ thousand)

Site remediation and disposal of

chemical stockpile and other provisions

Site restoration of leasehold

improvement Total

2015 2015 2015

Opening balance 6,133 1,030 7,163

Additional provisions recognised 327 - 327

Reduction arising from payments/other sacrifices of future economic benefits

(894) - (894)

Reduction resulting from re-measurement (i) (2,538)

Unwind of discount and effect of changes in the discount rate - 53 53

Closing balance 3,028 1,083 4,111

Notes:

(i) The Authority had a provision in 2013-14 relating to an expected recycling rebate for Prescribed Industrial Waste from a landfill operator. This was assessed by the Authority during the year and a determination made to reject the rebate as it didn’t satisfy all the necessary requirements under the EP Act.

2014 2014 2014

Opening balance 7,763 980 8,743

Additional provisions recognised 1,169 - 1,169

Reduction arising from payments/other sacrifices of future economic benefits

(2,799) - (2,799)

Unwind of discount and effect of changes in the discount rate - 50 50

Closing balance 6,133 1,030 7,163

Site remediation and disposal of chemical stockpile

The Authority holds chemicals and dangerous goods stockpiles from 2 sources and an interest in site remediation:

1) Chemicals from the ChemCollect program, a chemical collection program run under joint agreement between the Commonwealth and State Governments. Under this agreement the Authority can recover 50% of the costs associated with this project. The estimated cost of disposing the remaining chemicals as at 30 June 2015 is $1.87 million (2014: $1.74 million).

2) The Authority continues to hold a stockpile of dangerous goods (chemicals) collected as part of a rural chemical collection program, run by the former Melbourne Metropolitan Board of Works. The estimated cost of disposing of these chemicals is $0.83 million (2014: $0.75 million).

3) The Authority has successfully prosecuted a former licence holder following the abandonment of prescribed industrial waste at the licence holder's leased premises and other premises. The Authority made these wastes safe for transport and ongoing storage. A significant proportion of these wastes has been disposed of, and the remaining stockpile has been moved to licensed Schedule 4 premises for ongoing storage. The Authority has been involved with the abandoned wastes to ensure there is no risk to the environment or human health in the future. Work has now been completed (2014: $0.02 million).

4) The Authority has continued its work with local councils in relation to a remediation of contaminated sites. The total cost of the remaining remediation is estimated to be $0.38 million (2014: $1.08 million). Refer to contingent liabilities (Note 18).

Site restoration of leasehold improvement

The provision for site restoration of leasehold improvement represents the present value of the future payments that the Authority is presently obligated to make in respect of make good clauses under non-cancellable operating lease agreements. The estimate will vary if the Authority exercises its option to a further term. The unexpired term of the lease varies up to a maximum of 15 years.



6969


Note 15. Superannuation

Employees of the Authority are entitled to receive superannuation benefits and the Authority contributes to both defined benefit and defined contribution plans. The defined benefit plans provide benefits based on years of service and final average salary.

The Authority does not recognise any defined benefit liability in respect of the plans because the Authority has no legal or constructive obligation to pay future benefits relating to its employees; its only obligation is to pay superannuation contributions as they fall due. The Department of Treasury and Finance recognises and discloses the State’s defined benefit liabilities in its financial statements.

However, superannuation contributions paid or payable for the reporting period are included as part of employee benefits in the net result of the Authority.

The name, details and amounts expensed in relation to the major employee superannuation funds and contributions made by the Authority are as follows:

($ thousand)

Fund

Paid contribution for the yearContribution outstanding at

year end

2015 2014 2015 2014

(1) Defined benefit plans:

Emergency Services and State Superannuation Fund (ESS) - new scheme

205 232 - -

Emergency Services and State Superannuation Fund (ESS) - revised

127 117 - -

Emergency Services and State Superannuation Fund (ESS) – Accumulation Scheme

29 17

Other - 0 - -

Total defined benefit plans 361 366 - -

Defined contribution plans:

VicSuper 1,964 1,794 - -

Other 611 441 - -

Total defined contribution plans 2,575 2,235 - -

Total 2,936 2,601 - -

(1) The basis for determining the level of contributions is determined by various actuaries of the defined superannuation plans.



Note 16. Leases

Leasing arrangements

Operating leases

The Authority has entered into a number of operating lease agreements where the lessors effectively retain the risks and benefits incidental to ownership of the leased items. lease payments are charged to the net result over the lease term as payments made are representative of the pattern of benefits derived.

Commitments in relation to leases contracted for at the reporting date but not recognised as liabilities are:

($ thousand)

2015 2014

Non-cancellable operating lease payables

Not longer than one year 2,432 2,187

longer than one year and not longer than five years 9,971 8,847

longer than five years 3,341 4,965

Total 15,744 15,999

Finance leases

Under the Department of Treasury and Finance's vehicle leasing policy, vehicles leased after 1 February 2004 are subject to Finance lease arrangements, where the Authority retains the risks and benefits incidental to ownership of these leased vehicles.

($ thousand)

Minimum future lease payments (i)

Present value of minimum future lease payments

Notes 2015 2014 2015 2014

Finance lease liabilities payable

Not longer than one year 636 783 575 725

longer than one year and not longer than five years

987 716 949 685

longer than five years - - -

Minimum future lease payments 1,623 1,499 1,524 1,410

less: future finance charges (99) (89) - -

Present value of minimum lease payments 1,524 1,410 1,524 1,410

Included in the financial statements as:

Current borrowings lease liabilities 12 575 725

Non-current borrowings lease liabilities 12 949 685

Total borrowings lease liabilities 1,524 1,410

Notes:

(i) Minimum future lease payments include the aggregate of all lease payments and any guaranteed residual.

(a) Maturity analysis of finance lease liabilities

Please refer to Table 19.4 in Note 19 for the ageing analysis of finance lease liabilities.

(b) Nature and extent of risk arising from finance lease liabilities

Please refer to Note 19 for the nature and extent of risk arising from finance lease liabilities.



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Note 17. Commitments for expenditure

The following commitments have not been recognised as liabilities in the financial statements:

($ thousand)

2015 2014

Capital expenditure commitments (i)

Property, plant and equipment payable

Not longer than one year (ii) 213 323

longer than one year and not longer than five years - -

longer than five years - -

Total capital expenditure commitments 213 323

Other expenditure commitments (i)

Payable

Not longer than one year - 66

longer than one year and not longer than five years - -

longer than five years - -

Total other expenditure commitments - 66

Notes:

(i) All amounts shown in the commitments note are nominal amounts inclusive of GST.

(ii) Finance lease and non-cancellable operating lease commitments are disclosed in Note 16.

Note 18. Contingent assets and contingent liabilities

Contingent assets

There were no contingent assets for the Authority at 30 June 2015.

Contingent liabilities

The Authority has the following contingent liabilities:

1) The authority is currently contesting a claim in the Supreme Court relating to the rejection of a recycling rebate of waste deposited into a landfill received from a landfill operator. The amount of the potential claim by the operator is $0.75 million. The Authority believes it has acted in accordance with the EP Act and is defending the claim.

2) At 30 June 2015, the Authority has a number of matters subject to prosecution and litigation action, for which the Authority may be liable for legal costs if unsuccessful. Due to the diversity of issues associated with prosecution matters and their discretionary nature, quantification of the financial effect cannot be reliably estimated and therefore is impractical to do so.

3) The Authority has recognised a liability for works related to several contaminated sites (Note 14(b)). On completion of the works, the Authority may have a further unquantified obligation, dependent upon subsequent tests and community negotiation. Therefore, quantification of the financial effect cannot be reliably estimated and therefore impractical to do so.

Note 19. Financial instruments

(a) Financial risk management objectives and policies

The Authority’s principal financial instruments comprise:

- cash assets

- term deposits

- receivables (excluding statutory receivables)

- investments in managed scheme

- payables (excluding statutory payables); and

- finance lease payables.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset and financial liability above are disclosed in Note 1 to the financial statements.



The carrying amounts of the Authority’s contractual financial assets and financial liabilities by category are in Table 19.1 below.

Table 19.1: Categorisation of financial instruments

($ thousand)

Category Notes 2015 2014

Contractual financial assets

Cash and cash equivalents Not applicable 20(a) 275,140 165,365

Investments in Managed Fund Fair value 19.8 191,265 192,317

Receivables loans and receivables 7 5,586 4,058

Total contractual financial assets (i) 471,991 361,740

Contractual financial liabilities

Payables Financial liabilities at amortised cost

13 7,714 13,651

Finance lease liabilities Financial liabilities at amortised cost

12, 16 1,524 1,410

Total contractual financial liabilities (ii) 9,238 15,061

Note:

(i) The total amount of financial assets disclosed here excludes statutory receivables (i.e. amounts owing from Victorian Government and GST input tax credit recoverable).

(ii) The total amount of financial liabilities disclosed here excludes statutory payables (i.e. taxes payable).

Table 19.2: Net holding gain/loss on financial instruments by category

($ thousand)

2015 Net holding gain/lossTotal interest income/

(expense) Total

Financial assets designated at fair value through operating statement

(1,052) 9,561 8,509

Total contractual financial assets (1,052) 9,561 8,509

2014 Net holding gain/ lossTotal interest income/

(expense) Total

Financial assets designated at fair value through operating statement

2,317 7,800 10,117

Total contractual financial assets 2,317 7,800 10,117

(b) Credit risk

The Authority's exposure to credit risk arises from the potential default of counter parties on their contractual obligations resulting in financial loss to the Authority. The credit risk on financial assets of the Authority which have been recognised on the balance sheet, is generally the carrying amount, net of any provisions for doubtful debts.

Maximum exposure to credit risk is the carrying amounts of financial assets.

As at the reporting date, there is no evidence to indicate that any of the financial assets were impaired.

There are no financial assets that have had their terms renegotiated so as to prevent them from being past due or impaired, and they are stated at the carrying amounts as indicated. The following table discloses the ageing only of financial assets that are past due but not impaired:



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Note 19. Financial instruments (continued)

(b) Credit risk (continued)

Table 19.3: Ageing analysis of contractual financial assets (i)

($ thousand)

2015Carrying amount

Not past due

and not impaired

Past due but not impairedImpaired financial

assetsLess than

1 month1–3

months3 months–

1 year 1–5 years

Cash and cash equivalents 275,140 275,140 - - - - -

Receivables:

Trade debtors 3,418 1,918 - 1,500 - - -

Receivables from Commonwealth Government

856 856 - - - - -

Interest receivables 1312 1312 - - - - -

Other receivables 0 0 - - - - -

Total 280,726 279,226 - 1,500 - - -

2014

Cash and cash equivalents 165,365 165,365 - - - - -

Receivables:

Trade debtors 2,343 2,343 - - - - -


867 867 - - - - -

Interest receivables 848 848 - - - - -

Other receivables 0 0 - - - - -

Total 169,423 169,423 - - - - -

Note:

(i) The carrying amounts disclosed here exclude statutory amounts (e.g. Amounts owing from the Victorian Government and GST input tax credit recoverable).

(c) Liquidity risk

liquidity risk arises when the Authority is unable to meet its financial obligations as they fall due. The Authority operates under the government fair payments policy of settling financial obligations within 30 days and in the event of a dispute, makes payments within 30 days from the date of resolution. It also continuously manages risk through monitoring future cash flows and maturities planning to ensure adequate holding of high quality liquid assets.

Maximum exposure to liquidity risk is the carrying amounts of financial liabilities.



Table 19.4: Maturity analysis of contractual financial liabilities (i)

($ thousand)

2015Carrying amount

Nominal amount

Maturity dates

Less than 1 month

1–3 months

3 months– 1 year 1–5 years 5+ years

Payables (ii):

Trade creditors 3,584 3,584 1,996 103 12 - 1,473

Accruals 3,167 3,167 3,167 - - - -

Salaries and other employee entitlements

963 963 963 - - - -

Borrowings: - -

Finance lease liabilities 1,524 1,622 91 114 430 987 -

Total 9,238 9,336 6,217 217 442 987 1,473

2014

Payables (ii):

Trade creditors 2,995 2,995 1,534 64 4 - 1,393

Accruals 9,997 9,997 9,997 - - - -

Salaries and other employee entitlements

659 659 659 - - - -

Borrowings:

Finance lease liabilities 1,410 1,712 177 136 528 871 -

Total 15,061 15,363 12,367 200 532 871 1,393

Note:

(i) Maturity analysis is presented using the contractual undiscounted cash flows.

(ii) The carrying amounts disclosed exclude statutory amounts (e.g. GST payables). The Authority intends to settle the above financial liabilities in line with its contractual obligations.

The following table discloses the contractual maturity analysis for the Authority’s financial liabilities:

(d) Market risk

The Authority's exposures to market risk are primarily through interest rate and equity risks with only insignificant exposure to foreign currency. Objectives, policies and processes used to manage each of these risks are disclosed in the paragraphs below.

Equity risk

The Authority is exposed to equity price risk through its investment in the Victorian Funds Management Corporation Capital Stable Fund. The fund manager on behalf of the Authority closely monitors performance and manages equity price risk through diversification of its investment portfolio. The Authority's sensitivity to equity is detailed in Table 19.7.

Foreign currency risk

The Authority is exposed to insignificant foreign currency risk through its payables relating to purchases of supplies and consumables from overseas. This is because of a limited amount of purchases denominated in foreign currencies and a short time frame between commitment and settlement.

The Authority manages its risk through monitoring of movements in exchange rates against US dollars and ensures availability of funds through rigorous cash flow planning and monitoring. Based on past and current assessment of the economic outlook, it is deemed unnecessary for the Authority to enter into any hedging arrangements to manage the risk.

Interest rate risk

Exposure to interest rate risk is insignificant and might arise primarily through the Authority's variable rate cash deposits. The Authority's exposure is insignificant due to its policy to minimise risk by mainly undertaking fixed rate investments with relatively even maturity profiles which are managed by Treasury Corporation of Victoria.



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Note 19. Financial instruments (continued)

Table 19.5: Interest rate exposure of contractual financial instruments

($ thousand)

2015

Weighted average

interest rate %

Carrying amount

Interest rate exposure

Fixed interest rate

Variable interest rate

Non-interest bearing

Financial assets

Cash and cash equivalents 2.20 275,140 274,048 1,384 (292)

Receivables:

Trade debtors 3,418 - - 3,418


856 - - 856

Interest receivables 2.20 1,312 1,312 - -

Other receivables - - - -

Total financial assets 280,726 275,360 1,384 3,982

Financial liabilities

Payables 7,714 - - 7,714

Finance lease liabilities 5.41 1,524 1,524 - -

Total financial liabilities 9,238 1,524 - 7,714

2014

Financial assets

Cash and cash equivalents 2.70 165,365 164,848 510 7

Receivables:

Trade debtors 2,343 - - 2,343


867 - - 867

Interest receivables 2.68 848 848 - -

Other receivables 0 - - -

Total financial assets 169,423 165,696 510 3,217

Financial liabilities

Payables 13,651 - - 13,651

Finance lease liabilities 6.29 1,410 1,410 - -

Total financial liabilities 15,061 1,410 - 13,651

Sensitivity disclosure analysis and assumptions

Taking into account past performance, future expectations, economic forecasts, and management’s knowledge and experience of the financial markets, the Authority believes the following movements are ‘reasonably possible’ over the next 12 months.

- a movement of 25 basis points up and down (2014: 25 basis points up and down) in market interest rates (AUD) from year-end rates of 1.95 per cent (2014: 2.45 per cent).



Table 19.6: Market risk exposure

($ thousand)

2015

Interest rate risk

Carrying amount

-25 basis points + 25 basis points

Net result Equity Net result Equity

Contractual financial assets:

Cash and cash equivalents (i) 275,140 3 3 (3) (3)

Receivables 5,586 - - - -

Contractual financial liabilities:

Payables 7,714 - - - -

Finance lease liabilities 1,524 - - - -

Total impact 289,964 3 3 (3) (3)

2014 -25 basis points +25 basis points

Contractual financial assets:

Cash and cash equivalents (i) 165,365 1 1 (1) (1)

Receivables 4,058 - - - -

Contractual financial liabilities:

Payables (ii) 13,651 - - - -

Finance lease liabilities 1,410 - - - -

Total impact 184,484 1 1 (1) (1)

Notes:

(i) Cash and cash equivalents includes a deposit of $1,384 thousand (2014: $0.510 thousand) that is exposed to floating rate movements. Sensitivities to these movements are calculated as follows:

- 2015: $1.384 million x -.0025 = -$.003 million; and $1.384 million x +.0025 = $.003 million

- 2014: $0.510 million x -.0025 = -$.001 million; and $0.510 million x +.0025 = $.001 million.



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Table 19.7: Other Price risk sensitivity

($thousand)

2015

Other price

Carry amount

-15% +15%

Net Result

Fair value movement

through operating

statement Net Result

Fair value movement

through operating

statement


Managed investment (i) 191,265 - (5,738) - 5,738

Total impact - (5,738) - 5,738

2014

Other price

Carry amount

-15% +15%

Net Result

Fair value movement

through operating

statement Net Result

Fair value movement

through operating

statement


Managed Investment (i) 192,317 - (5,769) - 5,769

Total impact - (5,769) - 5,769

(i) Managed Investments includes Funds deposited with the Victorian Funds Management Corporation Capital Stable Fund that are classified as a financial asset. The Fund invests in a combination of asset classes which include cash deposits, fixed term deposits and equities which are subject to movements in equity prices. Investment held as at 30 June 2015 is $191.26 million (2014: $192.31 million). The Authority's exposure to equity risk is approximately 20 per cent of the Capital Stable Fund portfolio mix which equates to $38,252 thousand (2014: 38,460 thousand). Sensitivities to these movements are calculated as follows:

- 2015: $38.25 million x -0.15 =-$5.738 million; and $38.25 x 0.15 =$5.738 million - 2014: $38.46 million x -0.15 =-$5.769 million; and $38.46 million x 0.15 =$5.769 million

(e) Fair value

On-balance sheet

The net fair value of cash, cash equivalents and non-interest bearing monetary financial assets and financial liabilities of the Authority approximates their carrying amounts.

The net fair value of other monetary financial assets and financial liabilities is based upon market prices where a market exists, or by discounting the expected future cash flows by current interest rates for assets and liabilities with similar risk profiles.

The fair value and net fair value of financial instruments assets and liabilities are determined as follows:

- level 1 - the fair value of financial instruments with standard terms and conditions and traded in active liquid markets are determined with reference to quoted market prices.

- level 2 - the fair value is determined using inputs other than quoted prices that are observable for the financial asset or liability, either directly or indirectly; and

- level 3 - the fair value in accordance with generally accepted pricing models based on discounted cash flow analysis using unobservable market inputs:

The Authority considers the carrying amount of financial instruments assets and liabilities recorded in the financial statements to be a fair approximation of their fair values, because of the short-term nature of the financial instruments and the expectation that they will be paid in full.



Table 19.8: Financial assets measured at fair value

( $ thousand)

2015Carrying amount as

at 30 June 2015

Fair value measurement at end of reporting period using

Level 1 Level 2 Level 3


Managed investment 191,265 - 191,265 -

Total 191,265 - 191,265 -

2014


Managed Investment 192,317 192,317 -

Total 192,317 192,317 -

There have been no transfers between levels during the period.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced liquidation sale.

Managed investment scheme

The Authority invests in a managed investment Fund (Capital Stable Fund) with the Victorian Funds Management Corporation. In measuring fair value the Fund Manager considers the valuation techniques and inputs used in valuing these funds as part of its due diligence prior to investment, to ensure they are reasonable and appropriate and therefore the net asset value (NAV) of the funds may be used as an input into measuring their fair value. In measuring this fair value, the NAV of the fund is adjusted, as necessary, to reflect restrictions and redemptions, future commitments and other specific factors of the fund.

Off-balance sheet

The Authority has financial assurances (bank guarantees) that it may draw down on if required. These have a monetary face value which approximates their carrying value. The values of these financial assurances are $155.5 million (2014: $140.9m).

The Authority has potential financial liabilities which may arise from certain contingencies disclosed in Note 18.

Note 20. Cash flow information

(a) Reconciliation of cash and cash equivalents

($ thousand)

2015 2014

Cash at bank (i) (300) 0

Cash on hand 8 7

Deposits held with Treasury Corporation of Victoria

Investments - deposits at call 1,384 510

Investments - fixed term deposits 274,048 164,848

Balance as per cash flow statement 275,140 165,365

Notes:

(i) The above funding arrangements often result in the Authority having a notional shortfall in the cash at bank required for payment of unpresented cheques at the reporting date. At 30 June 2015, there was an outstanding Australian Taxation Office payment.



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Note 20. Cash flow information (continued)

Investments

Investments comprise deposits held with the Treasury Corporation of Victoria. At call deposits have a floating interest rate between 1.95% and 2.45% (2014: 2.45% and 3.10%). Fixed deposits have average interest bearing rate of 2.2% (2014: 2.68%).

Cash at bank

Due to the State of Victoria’s investment policy and government funding arrangements, government departments (including the Authority) generally do not hold a large cash reserve in their bank accounts. Cash received by the Authority from the generation of revenue is generally paid into the state’s bank account, known as the Public Account. Similarly, any Authority expenditure, including that in the form of cheques drawn by the Authority for the payment of goods and services to its suppliers and creditors is made via the Public Account. The process is such that the Public Account would remit to the Authority the cash required for the amount drawn on the cheques. This remittance by the Public Account occurs upon the presentation of the cheques by the Authority’s suppliers or creditors.

(b) Reconciliation of net result for the year to net cash flows from operating activities

($ thousand)

2015 2014

Net result for the year 128,270 81,905

Non-cash movements:

(Gain)/loss on sale or disposal of non-current assets (153) (77)

Depreciation and amortisation of non-current assets 4,563 4,495

Impairment of statutory receivables 1,348 6,074

Movements in assets and liabilities:

(Increase)/decrease in receivables (15,976) 32,339

(Increase)/decrease in other non-financial assets 184 (56)

Increase/(decrease) in payables (5,884) (3,290)

Increase/(decrease) in provisions (2,355) (2,093)

Net cash flows from operating activities 109,997 119,297

Note 21. Reserves

($ thousand)

2015 2014

Physical asset revaluation surplus (i)

Balance at beginning of financial year 2,779 2,779

Balance at end of financial year 2,779 2,779

Notes:

(i) The physical assets revaluation surplus arises on the revaluation of building leasehold improvements.



Note 22. Ex-gratia payments

The Authority wrote-off a number of litter fines during the course of the year in accordance with its litter fine write-off policy. The total amount of write-offs for the year was $1.34 million (2014: $1.65 million). Refer to note 6(b). Disclosure is in accordance with FRD 11A Disclosure of ex-gratia expenses.

There were no other ex-gratia payments other than those described in the preceding paragraph.

Note 23. Responsible persons

In accordance with the Ministerial Directions issued by the Minister for Finance under the Financial Management Act 1994, the following disclosures are made regarding responsible persons for the reporting period.

Names

The persons who held the positions of ministers, responsible persons and accountable officers in the Authority are as follows:

Minister for Environment and Climate Change: The Hon. Ryan Smith MP 01 July 2014 - 03 December 2014

Minister for Environment and Climate Change and Water: The Hon. Lisa Neville MP 04 December 2014 - 30 June 2015

Chairman: Cheryl Batagol

Chief Executive and Accountable Officer: Matt Vincent 01 July 2014 - 17 August 2014

Nial Finegan 18 August 2014 - 30 June 2015

Remuneration

Amounts relating to ministers are reported in the financial statements of the Department of Premier and Cabinet.

Remuneration received or receivable by the Chairman as responsible person in connection with duties associated with her role as the Chairman of the Environment Protection Authority (EPA) during the reporting period was in the range:

$110,000 - $120,000 (2014: $110,000 – $120,000).

Remuneration received or receivable by the Accountable Officer (Chief Executive Officer) in connection with the management of the EPA during the reporting period was in the range:

$250,000 – $259,000* (2014: $270,000 – $279,999).

*Excludes renumeration for Executive Officer's acting in this role which has been included in Note 24.

Other transactions

Other related transactions and loans requiring disclosure under the Directions of the Minister for Finance have been considered and there are no matters to report.

Note 24. Remuneration of executives

The numbers of executive officers, other than the Accountable Officer, during the reporting period are shown in the first two columns in the table below in their relevant income bands. The base remuneration of executive officers is shown in the third and fourth columns. Base remuneration is exclusive of bonus payments, long-service leave payments, redundancy payments and retirement benefits.

Several factors have affected total remuneration payable to executives over the year. A number of employment contracts were completed during the year and renegotiated and a number of executives received bonus payments during the year. These bonus payments depend on the terms of individual employment contracts.



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Note 24. Remuneration of executives Continued

Income band Total remuneration(i) Base remuneration(i)

2015

No.

2014

No.

2015

No.

2014

No.

<$100,000* 2 - 2 -

$100,000 – $109,999 - - - -

$150,000 – $159,999 - - - -

$160,000 – $169,999 1 1 1 1

$190,000 – $199,999 - - - 1

$200,000 – $209,999 - - - 2

$210,000 – $219,999 - 3 1 1

$220,000 – $229,999 - 1 1 -

$230,000 – $239,999 2 - - -

$240,000 – $249,999 - - - -

$250,000 – $259,999 - - - -

$260,000 – $269,999 - - - -

$270,000 – $279,999 - - - -

$280,000 – $289,999 - - - -

Total numbers* 5 5 5 5

Total annualised employee equivalent ** 4.6 5 4.6 5

Total amount $1,062,524 $1,045,147 $1,018,389 $990,412

(i) Base and total remuneration comparative amounts have been amended in line with FRD 21B and whole of government model report definitions.

Two Executive Officers resigned and were replaced during the course of the year. For the purpose of disclosure the total base and remuneration amounts have been included in the disclosure.

* Accountable Office remuneration has been included in Note 23 and comparative year’s figures have been adjusted accordingly.** Total annualised employee equivalent is based on working 38 ordinary hours per week over the 2015 reporting period.

Note 25. Remuneration of auditors

($thousand)

2015 2014

Victorian Auditor General

Audit or review of the financial statements 53 51

Total remuneration of auditors 53 51

Note 26. Subsequent events

From 1 July 2015, amendments made to the Environment Protection Act 1970 through the Environment Protection and Sustainability Victoria Amendment Act 2014 legislates the transfer of management and administration of the Sustainability fund from EPA to DElWP.

The collection of landfill levy will be continued to be administrated by the EPA and the recording and distribution of the revenue will be managed by DElWP.

As a result of the legislative amendments, the cash balance of the Sustainability Fund was transferred from EPA to DElWP as at 1 July 2015.

The transfer resulted in a $383.76 million decrease in cash and investments (assets), $47.01 million decrease in receivables (assets) and a decrease in contributed capital (equity) of $430.77 million in the 2015–16 financial year.



Note 27. Trust fund disclosures

(a) Sustainability Fund

The Sustainability Fund (SF) account forms part of the Environment Protection Fund, which is managed by EPA. EPA credits the SF with all landfill levy revenue remaining after distributions, to itself, Waste Management Groups and Sustainability Victoria, in accordance with Environment Protection (distribution of landfill levy) Regulations.

Funds in the SF account are allocated by the Premier and the Minister to projects aimed at:

- fostering environmentally sustainable use of resources and best practices in waste management

- fostering community action in relation to the reduction of greenhouse gas emissions or adaption or adjustment to climate change in Victoria

The Sustainability Fund Secretariat, managed by Sustainability Victoria (SV), oversees the management of these projects and receives a management fee for doing so. Except for the management fees, SV accounts for payments to grant recipients and reimbursements from the EPA relating to these projects via its balance sheet.

The following table is a reconciliation of the fund balance.

($thousand)

2015 2014

Opening balance (accrual only) 64,113 67,924

Opening balance (cash) 247,233 170,001


Receipts

land fill levy-cash 166,121 118,424

land fill levy-accrual (17,102) (3,811)

Payments

Sustainability Victoria 29,590 41,192

Closing balance (accrued revenue) 47,013 64,113

Closing balance (Cash) 383,764 247,233

Closing balance* 430,777 311,346

* Refer to note 26 for explanation of subsequent event transfer of SF transfer to DElWP.

(b) HazWaste Fund

The Hazwaste Fund (Fund) account forms part of the Environment Protection Fund, which is managed by the Environment Protection Authority (EPA). In January 2007, the Victorian Government developed a strategy to reduce hazardous waste. The Hazwaste fund (fund) was established to achieve specific waste reduction targets by supporting organisations to accelerate reductions in the volume and hazard of hazardous waste generated in Victoria. Revenue from the increase in prescribed industrial waste levy fees from manufacturing sources contributed towards the Fund.

Fund support is available for projects targeted at reducing the volume or hazard category of hazardous waste disposed at landfills. A Fund panel has been established to inform Fund decision making and investment priorities. The Minister for Environment and Climate Change and the Chairman of the Authority will make or delegate final funding decisions for the fund projects.



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Note 27. Trust fund disclosures Continued

(b) HazWaste Fund

The following table is a reconciliation of the Fund balance.

Hazwaste Fund

($ thousand)

2015 2014

Opening balance 28,828 32,504

Receipts

Prescribed Industrial Waste levy- cash 0 0

Prescribed Industrial Waste levy- accrual 0 0

Payments

Grant to recipients 2,711 3,676

Closing balance 26,117 28,828

Note 28. Glossary of terms

Comprehensive result

Total comprehensive result is the change in equity for the period other than changes arising from transactions with owners. It is the aggregate of net result and other non-owner changes in equity.

Capital asset charge

The capital asset charge represents the opportunity cost of capital invested in the non-current physical assets used in the provision of outputs levied by the state.

Commitments

Commitments include those operating, capital and other outsourcing commitments arising from non-cancellable contractual or statutory sources.

Depreciation

Depreciation is an expense that arises from the consumption through wear or time of a produced physical or intangible asset. This expense is classified as a 'transaction' and so reduces the 'net result from transactions'.

Employee benefits expenses

Employee benefits expenses include all costs related to employment including wages and salaries, leave entitlements, redundancy payments and superannuation contributions.

Financial asset

A financial asset is any asset that is:

(a) cash;

(b) an equity instrument of another entity;

(c) a contractual or statutory right:

(i) to receive cash or another financial asset from another entity; or

(ii) to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity; or

(d) a contract that will or may be settled in the entity’s own equity instruments and is:

(i) a non-derivative for which the entity is or may be obliged to receive a variable number of the entity’s own equity instruments; or

(ii) a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments.



Financial instrument

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets or liabilities that are not contractual (such as statutory receivables or payables that arise as a result of statutory requirements imposed by governments) are not financial instruments.

Financial liability

A financial liability is any liability that is:

A contractual or statutory obligation:

(i) To deliver cash or another financial asset to another entity; or

(ii) To exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the entity.

Financial statements

A complete set of financial statements comprises:

a) A statement of financial position as at the end of the period;

b) A statement of profit and loss and other comprehensive income for the period;

c) A statement of changes in equity for the period;

d) A statement of cash flow for the period;

e) Notes, comprising a summary of significant accounting policies and other explanatory information;

f) Comparative information in respect of the preceding period as specified in paragraphs 38 of AASB 101 Presentation of Financial Statements; and

g) A statement of financial position as at the beginning of the preceding period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statement, or when it reclassifies items in its financial statements in accordance with paragraph 41 of AASB101.

Grants and other transfers

Transactions in which one unit provides goods, services, assets (or extinguishes a liability) or labour to another unit without receiving approximately equal value in return. Grants can either be operating or capital in nature. While grants to governments may result in the provision of some goods or services to the transferor, they do not give the transferor a claim to receive directly benefits of approximately equal value. For this reason, grants are referred to by the AASB as involuntary transfers and are termed non reciprocal transfers. Receipt and sacrifice of approximately equal value may occur, but only by coincidence. For example, governments are not obliged to provide commensurate benefits, in the form of goods or services, to particular taxpayers in return for their taxes.

Grants can be paid as general purpose grants which refer to grants that are not subject to conditions regarding their use. Alternatively, they may be paid as specific purpose grants which are paid for a particular purpose and/or have conditions attached regarding their use.

Intangible assets

Intangible assets represent identifiable non-monetary assets without physical substance.



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Note 28. Glossary of terms Continued

Interest expense

Costs incurred in connection with the borrowing of funds include expenses include interest on bank overdrafts and short-term and long-term borrowings, amortisation of discounts or premiums relating to borrowings, interest component of finance lease repayments, and the increase in financial liabilities and non-employee provisions due to the unwinding of discounts to reflect the passage of time.

Interest income

Interest income includes unwinding over time of discounts on financial assets and interest received on bank term deposits and other investments.

Net result

Net result is a measure of financial performance of the operations for the period. It is the net result of items of revenue, gains and expenses (including losses) recognised for the period, excluding those that are classified as other non-owner changes in equity.

Net result from transactions/net operating balance

Net result from transactions or net operating balance is a key fiscal aggregate and is income from transactions minus expenses from transactions. It is a summary measure of the ongoing sustainability of operations. It excludes gains and losses resulting from changes in price levels and other changes in the volume of assets. It is the component of the change in net worth that is due to transactions and can be attributed directly to government policies.

Non-financial assets

Non-financial assets are all assets that are not ‘financial assets’. It includes inventories, land, buildings infrastructure, roads networks, land under roads, plant and equipment, investment properties, cultural and heritage assets, intangible and biological assets.

Other economic flows

Other economic flows are changes in the volume or value of an asset or liability that do not result from transactions. These include gains and losses from disposals, revaluations and impairments of non-current physical and intangible assets; actuarial gains and losses arising from defined benefit superannuation plans; fair value changes of financial instruments and agricultural assets; and depletion of natural assets (non-produced) from their use or removal. In simple terms, other economic flows are changes arising from market re-measurements.

Payables

Includes short and long term trade debt and accounts payable, grants and interest payable.

Receivables

Includes amounts owing from short and long term trade credit and accounts receivable, accrued investment income, grants, taxes and interest receivable.

Sales of goods and services

Refers to revenue from the direct provision of goods and services and includes fees and charges for services rendered, sales of goods and services, fees from regulatory services, work done as an agent for private enterprises. User charges include revenue from the sale of goods and services revenue.

Supplies and services

Supplies and services generally represent cost of goods sold and the day-to-day running costs, including maintenance costs, incurred in the normal operations of the Authority.

Transactions

Transactions are those economic flows that are considered to arise as a result of policy decisions, usually an interaction between two entities by mutual agreement. They also include flows within an entity such as depreciation where the owner is simultaneously acting as the owner of the depreciating asset and as the consumer of the service provided by the asset. Taxation is regarded as mutually agreed interactions between the government and taxpayers. Transactions can be in kind (e.g. assets provided/given free of charge or for nominal consideration) or where the final consideration is cash. In simple terms, transactions arise from the policy decisions of the government.



NOTES


EPA Annual Report 2014–2015

Environment Protection Authority Victoria · 2020-01-23 · Connecting with the community Year Four...

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