Victoria Infrastructure Report Card 2010 by Engineers Australia

www.engineersaustralia.org.au/ircvic

Victorian Infrastructure Report Card 2010 ISBN 978-0858258754 © Engineers Australia, February 2010 All rights reserved. Other than brief extracts, no part of this publication may be produced in any form without the written consent of the publisher. All Report Cards can be downloaded from www.engineersaustralia.org.au. Acknowledgements This publication was only possible with the support of members of Engineers Australia, other building and infrastructure professionals, and representatives from government departments, industry and business and professional associations. Victorian Infrastructure Report Card Committee • Tim Gosbell (Chair) • Tony Herbert • John Wilson Report Card contributors • Brian Bayley • Danielle Roche • Roger Greene • Jacqui Bridge • Denis Flett Victorian Division project staff • Glenda Graham, Executive Director • Adele Fitzpatrick, Executive Operations Assistant National Project Director • Project Director: Leanne Hardwicke, Director, International and National Policy, Engineers Australia Consultant • Principal Author: Athol Yates, Australian Security Research Centre • Project Team: Priyan Mendis, Jacinta Nelligan, Henry Pike, Trudy Southgate and Barbara Coe

Engineers Australia Victorian Division Engineering House Level 2, 21 Bedford Street North Melbourne VIC 3051. Tel: 03 9329 8188 Fax: 03 9326 6515 www.engineersaustralia.org.au/victoria

Australian Security Research Centre International Affairs House Level 1 32 Thesiger Court Deakin ACT 2605 Tel: 02 6161 5143 Fax: 02 6161 5144 www.securityresearch.org.au

CO ONT TEN NTS Communiqué

Rating gs summarry

iii

Overview

Rating proccess and desscription ...................................................................................................1 State-wide issues ........................................................................................................................2 Cross secto or challenges ..............................................................................................................4

Transp port

Roads ......................................................................................................................... 13 1.1 Summ mary ...........................................................................................................................13 1.2 Infrasttructure overrview ......................................................................................................13 1.3 Perforrmance ......................................................................................................................19 1.4 Future e challenges ..............................................................................................................22 1.5 Reporrt Card rating g .............................................................................................................24

Rail .............................................................................................................................. 25 2.1 Summ mary ...........................................................................................................................25 2.2 Infrasttructure overrview ......................................................................................................26 2.3 Perforrmance ......................................................................................................................31 2.4 Future e challenges ..............................................................................................................35 2.5 Reporrt Card rating g .............................................................................................................36

Ports ........................................................................................................................... 37 3.1 Summ mary ...........................................................................................................................37 3.2 Infrasttructure overrview ......................................................................................................37 3.3 Perforrmance ......................................................................................................................44 3.4 Future e challenges ..............................................................................................................44 3.5 Reporrt Card rating g .............................................................................................................45

Airports .................. . ................................................................................................... 47 4.1 Summ mary ...........................................................................................................................47 4.2 Infrasttructure overrview ......................................................................................................47 4.3 Perforrmance ......................................................................................................................55 4.4 Future e challenges ..............................................................................................................58 4.5 Reporrt Card rating g .............................................................................................................58

Water 5

61 Potable water w ............................................................................................................ 65 5.1 Summ mary ...........................................................................................................................65 5.2 Infrasttructure overrview ......................................................................................................65 5.3 Perforrmance ......................................................................................................................74 5.4 Future e challenges ..............................................................................................................78 5.5 Reporrt Card rating g .............................................................................................................78

Contents

Wastewater .............................................................................................................. 81 Summary ........................................................................................................................ 81 Infrastructure overview ................................................................................................... 81 Future challenges ........................................................................................................... 90 Report Card rating .......................................................................................................... 91

6.1 6.2 6.4 6.5

Stormwater .............................................................................................................. 93 7.1 Summary ........................................................................................................................ 93 7.2 Infrastructure overview ................................................................................................... 93 7.3 Performance ................................................................................................................... 97 7.4 Future challenges ........................................................................................................... 98 7.5 Report Card rating .......................................................................................................... 98 Irrigation .................................................................................................................. 99 Summary ........................................................................................................................ 99 Infrastructure overview ................................................................................................... 99 Performance ................................................................................................................. 104 Future challenges ......................................................................................................... 105 Report Card rating ........................................................................................................ 105

8.1 8.2 8.3 8.4 8.5

Energy

107

Electricity............................................................................................................... 109 9.1 Summary ...................................................................................................................... 109 9.2 Infrastructure overview ................................................................................................. 110 9.3 Performance ................................................................................................................. 119 9.4 Future challenges ......................................................................................................... 123 9.5 Report Card Rating ....................................................................................................... 124

Gas ......................................................................................................................... 127 10.1 Summary ...................................................................................................................... 127 10.2 Infrastructure overview ................................................................................................. 127 10.3 Performance ................................................................................................................. 135 10.4 Future challenges ......................................................................................................... 138 10.5 Report Card Rating ....................................................................................................... 139

Telecommunications

141

11.1 Summary ...................................................................................................................... 141 11.2 Infrastructure overview ................................................................................................. 142 11.3 Performance ................................................................................................................. 152 11.4 Future challenges ......................................................................................................... 155 11.5 Report Card Rating ....................................................................................................... 156

Appendices

157

Appendix A: Rating methodology ................................................................................. 158 Appendix B: Units and acronyms ................................................................................. 160 Appendix C: Glossary .................................................................................................... 162 Appendix D: References ................................................................................................ 166

CO OMM MUN NIQ QUÉ É The adequ uacy of Victtoria’s infrasstructure co ontinues to underpin th he delivery of o essential services, drive d econo omic growth h, support so ocial needss and remain ns crucial to o the economic performancce and deve elopment off our State. In 2005, Engineers E A Australia too ok the initiattive to raise communityy awareness s of the importancce of infrastrructure and to encoura age governm ments and tthe private sector s to usse best practtice in its pro ovision and d manageme ent. That initiative delivvered the firrst Victorian n Infrastructture Report Card. The 2005 Report Carrd provided a long overdue strateg gic overview w of various s infrastructture sectorss and an ind dependent assessment a t of the fitne ess for purp pose of Victoria’s key assets.. It put some e complex issues well on the agen nda of gove ernment, dia, and gen nerated muc ch community discussion about th he priorities,, industry and the med purpose and a quality of o infrastruccture in Victo oria. Five yearss on, it is tim mely to revie ew progress s on the ade equacy of V Victoria’s mo ost recent infrastructture outcom mes and stra ategies for the future. The 2010 Report Carrd recognise es that som me large infrrastructure p projects hav ve been initiated in n Victoria ovver the last five years. Examples include: Eastlink, Geelong Bypass and d M1 Upgra ade within th he roads se ector Region nal Rail Linkk and rolling g stock purc chases withiin the rail se ector The channel dredg ging in Portt Phillip Bay y The Su ugarloaf Inte erconnectorr and the Wonthaggi W Desalination Plant (early y stages) in n the pottable water sector The Wiimmera Mallee Pipeline e in the irrig gation secto or Upgrad ding of the Eastern E Tre eatment Plant (in progre ess) in the w wastewaterr sector. These and d many othe ers are reco ognised with hin the Rep port Card. Despite th his progresss Engineerss Australia re emains con ncerned that: Critical aspects of Victoria’s in nfrastructurre are barelyy adequate for current needs let alone future needss. Funding commitments are larrgely inadeq quate to sup pport the su ubstantial co osts of renewa al and replacement give en ongoing population growth and d future cha allenges of climate e change. for There is inadequa ate investme ent of time in the plann ning, consulttation and preparation p deliveryy to ensure infrastructu ure projects s are “readyy to go”. Current planning and a politicall processes s create a sh hort term fo ocus in an area where a very lon ng term focus is requirred. There is a lack of long term in nfrastructure e plans for Victoria’s V electricity, ga as, and telecom mmunication ns infrastruccture. The rail system do oes not mee et the needs s of the currrent population, let alone provide for future growth. g i

Communiqué

Both the 2005 and 2010 Report Cards examine key infrastructure sectors in Victoria, evaluate the status of assets and planning processes and assigns a rating that can range from A (very good) to F (inadequate). In Victoria, all ratings are between B (good) to D (poor). Ratings are given below for the current and past Victorian and National Report Cards. Infrastructure type

Victoria 2010

Victoria 2005

National 2005

National 2001

Roads overall

C+

Not rated

National roads

C+

State roads

C+

C-

Local roads

C-

Rail

C- Overall

C-

D-

C+

D Freight Ports

C+

Airports

Not rated

Potable water

B Metropolitan

B-

C+

C-

B- Non-metropolitan Wastewater

B-

B Metropolitan B- Non-metropolitan

Stormwater

C-

Irrigation

C-

D-

Electricity

C-

C+

B-

Gas

C+

Telecommunications

Not rated

Recommendations Engineers Australia recommends the following to ensure that Victoria’s infrastructure will, in time, meet the needs and expectations of business and the wider community. 1. The quantum of funding for infrastructure must be increased to ensure that Victoria’s economic strength will be maintained. 2. Governments must lead the development of long term, integrated infrastructure plans and ensure successful implementation through increased investment in the project planning and consultation phase. 3. The planning and provision of infrastructure must recognise the challenges of a growing population and the impacts that a changing climate will require. 4. A new body should be established to advise the Victorian Government on strategic planning and provide a direct interface with Infrastructure Australia. This will assist Victoria to maintain a coordinated and integrated critical list of “business case ready” projects for Australian Government funding. By studying the issues early, a set of advanced project plans and corresponding business cases could be maintained at a high state of readiness to proceed at short notice. 5. Governments must embrace appropriate opportunities to partner with the private sector to fund infrastructure development and develop alternative delivery models to ensure the risk profile delivers the best overall project outcome for the State.

RA ATIN NGS S SU UMMARY The follow wing summa arises the 20 010 Victoria an Infrastruccture Report Card ratin ngs. Infrastructu ure type

Grade

Co omment

Roads overa all

C+

National roa ads

C+

nises that the me etropolitan road d infrastructure is increasingly This rating recogn der stress due to t demand rising g faster than su upply. Without in ntroducing und

State roads

C+

me ethods to signific cantly reduce th he gap between supply and dem mand,

Local roads

C-

con ngestion will continue to rise evven further. Roa ads in regional areas a are mo ostly just mainta aining their existting quality, but will decline unle ess investment inccreases.

Rail

This rating recogn nises that that th here has been n no fundamental improvement to o e metropolitan ra ail network since 2005, althoug gh there are a number of the pro ojects underway y that should deliver improveme ents. Over the lo ong-term, a com mplete modernisation of metropolitan rail is req quired to meet the t significant inccrease in deman nd expected from m rising populattion and public transport t use. Wh hile important re egional rail segm ments have improved, quality is s still below wh hat is needed for rail freight to in ncrease its market share. Less used elementss of the t regional rail network remain n inadequate. T The quality of the e tram network is improving but is s still inadequate e in terms of ave erage speed an nd capacity.

Ports

C+

This rating recogn nises that while infrastructure i up pgrades have occurred, o and porrt land-use and strategic plans have been developed, there are many sig gnificant access and congestion n problems rema aining at and arround ports.

Airports

This rating recogn nises the considerable improvem ment in capacity y and quality of M Airporrt, and the main ntenance of Melbourne Airport'ss infrrastructure at Melbourne currfew-free status s. Integration of commercial/industrial developm ments pursued by Melbourne, Ess sendon and Mo oorabbin airportss with those dev veloped by arby local governments is unsa atisfactory as is access by public transport to nea all airports. The on ngoing viability of o smaller regio onal airports is a concern.

Potable wate er

This rating recogn nises that Victoriaâ&#x20AC;&#x2122;s water supplly has been dire ectly impacted d in rainfa all and growing p population. The construction off by the significant decline e desalination plant will future-p proof Melbourne eâ&#x20AC;&#x2122;s water supply y for the next the deccade, although at high energy and a financial co osts. This plant may m not have bee en needed had other sources of o water supply been pursued seriously s since the e 1990s. Plannin ng is still not evident to achieve e major changes s in water sup pply and use, which w means tha at additional dessalination plants s may be nee eded due to pop pulation growth and climate cha ange. Ensuring water susstainability will also a be a challenge in a numbe er of regional are eas.

Wastewaterr

B-

This rating recogn nises that Melbo ourneâ&#x20AC;&#x2122;s sewerag ge and treatmen nt infrastructure e mana aged and effectivve, and the upg grading of the Ea astern is efficiently Tre eatment Plant will w produce mucch better environ nmental outcom mes. However, faillure to use its re ecycled water iss a waste of a va aluable resource e. Insufficient atte ention is being given g to biosolid d management and to changing g the cen ntralised model of wastewater collection c and trreatment to allo ow for more loccal treatment and reuse. Waste ewater treatment infrastructure in some reg gional areas is considered c inadequate.

Stormwater

C-

This rating recogn nises that there has h been slow iimprovement in the quality of ormwater flow due to the installa ation of gross littter traps and otther devices. sto Ho owever, there ha as been no subsstantial improve ement in the wid despread exp ploitation of the stormwater ressource.

iii

Ratings Summary Infrastructure type Irrigation

Grade C-

Comment This rating recognises the increased investment in irrigation modernisation and efficiency. Projects like the Wimmera Mallee Pipeline and the Northern Victoria Irrigation Renewal Project will lead to dramatically improved irrigation efficiency, however, much of this infrastructure is yet to be delivered. Substantial irrigation planning and investment is required across the rest of the State.

Electricity

C-

This rating recognises that investment in gas and renewable generation has increased, and transmission and distribution assets are in a reasonable condition. However, the demand-supply balance remains tight, and the future of coal-fired generation is uncertain due to both the future carbon price and the practicality of clean coal technology. The transmission and distribution system is also vulnerable to extreme weather events that are predicted to become more frequent due to climate change. Insufficient attention has been given to demand management as a way to reduce peak demand.

Gas

This rating recognises that improvements are being made to the operation of the gas market and the quality of gas planning information. However, asset quality has not significantly improved and the Principal Transmission System remains vulnerable to single points of failure. Significant expansion in gas-fired generation will require additional investment in gas transmission pipelines.

Telecommunications

This rating recognises that telecommunications have become an essential service for business and the community, and while voice and mobile phone services are almost universally available, this is not the case for fast, affordable broadband across the State. Specifically, there is under-provision of fixed broadband infrastructure at exchanges in Melbourne and across Victoria, as well as under-provision of backhaul fibre in regional Victoria. Overall, there is a lack of an integrated strategic plan for telecommunications.

OV VER RVIE EW Rating g process and descrription The objectiive of the Re eport Card is to rate the quality q of eco onomic infrasstructure. Eng gineers Australia ha as been ratin ng infrastructture since 19 999. In 1999,, 2001 and 2 2005, nationa al report card ds were publisshed. In 2005 5, report card ds on Austra alian States and a Territorie es were published. This Report Carrd revises an nd expands on o the 2005 edition e of the e Victorian Report Card. The purposses of the Re eport Cards are a to: Raise awareness off politicians, media, m busin ness and the public that infrastructure e underpins the t nity’s quality of life and th hat inadequa ate infrastruccture impedess economic and a social commun growth, and reducess environmen ntal and sociietal sustaina ability Generate debate on n the adequa acy of the infrrastructure (including con ndition, distribution, funding and timiing) required d to meet socciety’s needs s Increase e appreciatio on of the valu ue of develop ping an integ grated and sttrategic apprroach to the provisio on of infrastru ucture Raise awareness off the new cha allenges facing Australia’’s infrastructu ure due to climate chang ge, change in demograp phics, deman nd increases s, resilience and a sustaina ability Improve e the policy, regulation, planning, p prov vision, opera ation and ma aintenance off infrastructure. s This Reporrt Card provid des a strateg gic overview of Victorian infrastructure that other organisation o can use wh hen they und dertake detailed analysis of particular infrastructurres. It also prrovides a benchmarkk that the com mmunity can use to identtify need and d evaluate altternative infrrastructure priorities ovver time. Ratings have been bassed on an asssessment of asset condittion, asset avvailability and reliability, asset mana agement, susstainability (iincluding eco onomic, environmental an nd social issues) and security. Th he assessme ent includes evaluating in nfrastructure policy, regulation, planning, provision, operation and a maintena ance. (See Appendix A A: Rating R metho odology for d details.) The assessmentt was carried d out through h research an nd consultation. Interview ws were held d with relevan nt stakeholde ers and docum ments were analysed. The e assessmen nt has relied on publicly a available info ormation and has, in line with its aimss, focused on n strategic is ssues, supple emented by q quantitative performance p e measures where w these were readilyy available. A number of o industry asssociations were w consulted and Engineers Austra alia provided input throug gh its expert panels p and grroups. Rating gs used are comparable with those o of past Reporrt Cards. The e rating scale e is detailed below.

Overview Rating scale Letter

Designation

Definition*

Very good

Infrastructure is fit for its current and anticipated future purposes

Good

grade

Minor changes required to enable infrastructure to be fit for its current and anticipated future purposes

Adequate

Major changes required to enable infrastructure to be fit for its current and anticipated future purposes

Poor

Critical changes required to enable infrastructure to be fit for its current and anticipated future purposes

Inadequate

Inadequate for current and anticipated future purposes

* Fitness for purpose is evaluated in terms of the needs of the community, economy and environment using criteria of sustainability, effectiveness, efficiency and equity.

State-wide issues Major factors influencing Victoria’s infrastructure demand and supply Both population and economic growth are key drivers of infrastructure demand. Population The figure below shows Victoria’s population projections along a high and low future growth path. It shows that Victoria’s population will expand from 5.2 million in 2007 to 8.2 million (57% increase) in 2051 under low growth assumptions, or 9.3 million (78% increase) under high growth assumptions. The vast majority of the population growth will occur in Melbourne. A growing population will accelerate the demand for all water, electricity, transport and telecommunication services.

Millions

Victoria’s recent and projected population using high and low growth assumptions

10 9 8 7 6 5 2051

2049

2047

2045

2043

2041

2039

2037

2035

2033

2031

2029

2027

2025

2023

2021

2019

2017

2015

2013

2011

2009

2007

2005

2003

Gross State Product The table below shows Victoria’s projected Gross State Product. Economic growth directly increases demand by businesses for infrastructure services, and indirectly by consumers due to their raised standard of living. Victoria’s Gross State Product Gross State Product

Percentage change

2008/09

2009/10

2010/11

2011/12

2012/13

Estimate

Forecast

Projection

2.25%

3.00%

0.50%

0.25%

Overview Climate change Climate change will both affect demand as well as supply of infrastructure. Important climate change impacts in Victoria over the next 50 years are expected to be: Victoria will become warmer with more hot days and fewer cold nights. By 2030, the annual average number of days over 35°C in Melbourne will grow from the current 10 to 10-15 days and in Mildura from 33 to 35-47 days. Warmer temperatures and population growth are likely to cause a rise in heat-related illness and death for those over 65, increasing in Melbourne from the current 289 annual deaths to 582-604 by 2020 and 980-1,318 by 2050. Warmer conditions may also help spread vector-borne, water-borne and food-borne disease further south; these health issues could increase pressure on medical and hospital services. A decline in annual rainfall combined with higher evaporation is likely to reduce run-off into rivers by up to 45 percent in 29 Victorian catchments by 2030. More frequent and severe droughts, with a greater fire risk, are likely. 3 In coastal areas, infrastructure is vulnerable to sea level rise and inundation. Key infrastructure impacts of the above will be: Growth in peak summer energy demand is likely due to air-conditioning use, and this may increase the risk of blackouts. Urban water security may be threatened by increases in demand and climate-driven reductions in water supply. Increases in extreme storm events are expected to cause more flash flooding, affecting both industry and infrastructure, including water, sewerage and stormwater, transport and communications, and may challenge emergency services.4

It is significant to note there are different levels of uncertainty attached to predictions of change for each environmental variable. For instance, there is a high level of confidence in the predictions that Victoria’s rainfall is decreasing in winter and spring, and there will be increased risk of bushfires in Victoria. There is moderate confidence in predictions that there will be decreasing annual average stream flow and increased drought frequency, intensity and duration in Victoria. There is low confidence in predictions that there will be abrupt changes, such as a step-change in rainfall, rapid melting of polar ice sheets or changes in global ocean currents; and changes in small-scale storm phenomena, such as tornadoes, hail and wind-gusts.5 Infrastructure investment The supply of infrastructure is heavily influenced by the amount of investment. The figure below illustrates the investment in infrastructure over a 25-year period and shows that Victoria’s investment levels have tracked parallel to the national levels until 2006 when investment declined in comparison to the national level. Investment levels are expected to increase significantly over the next few years.

Overview Index of economic infrastructure expenditure in Victoria and nationally

Real prices, base year index is 1988/89, base is 100 for national expenditure.

Cross sector challenges While each chapter identifies sector-specific challenges to the future provision of individual infrastructures, below are challenges that cross multiple infrastructure sectors.

Strategic planning, coordination and integration Infrastructure drives the productivity, liveability and sustainability of cities, towns and regions. Optimising all three is a considerable challenge that requires planning, coordination and integration. Strategic planning requires a long-term perspective which, for cities, can exceed 100 years. Coordination requires bringing together all stakeholders, including the owners, operators and builders of the infrastructure, the infrastructure users, and the community, in the planning process and negotiating mutually acceptable outcomes. Integration requires linking infrastructure plans with broader land-use objectives, as well as ensuring that plans of different infrastructures complement one another. Victoria’s level of strategic planning has improved considerably this decade as illustrated in the release of a number of plans such as the Victorian Transport Plan and Ports Future. The Victorian Government has also worked to improve integrated strategic decision-making by reforming legislation, policy and the priorities of infrastructure organisations. Victoria is also benefiting from increased national level strategic planning, such as the creation of a National Transmission Planner, and the work of Infrastructure Australia in identifying nationally significant infrastructure requirements. Challenges to improving planning, coordination and integration of infrastructure include: Ensuring that plans balance productivity, liveability and sustainability goals, and explicitly identify any tradeoffs that have to be made Recognising that strategic plans are based on predictions that often turn out to be inaccurate, e.g. population growth or traffic demand, and consequently plans have to be continually adapted so that the plan’s long-term vision can still be achieved Controlling overly-optimistic expectations of what the strategic plan can achieve (e.g. containing growth within boundaries, achieving high levels of infill, increasing economic activity in areas of social disadvantage), the ease of its implementation, and the ability to maintain a consistent vision over decades Ensuring that plans not only address growth areas, but also address the very large outer suburban areas and regional towns that today have inadequate infrastructure

Overview

Making unpopular decisions such as changing economic activity or relocate populations in areas that are unsustainable (e.g. irrigation areas that will be receiving up to 30% less water, and coastal areas in the face of rising sea levels) Implementing a long-term land-release program to meet the housing needs of a growing population and address housing affordability.

Funding New infrastructure provision can be extremely expensive, particularly in built-up areas. For example, it costs $95 million per km for the construction of the new Melbourne Main Sewer, and $86 million per km for the Regional Rail Link.a Victoria has recognised that there needs to be significant investment in infrastructure over the next few decades to meet existing and projected demand. Identified investment includes $38 billion for transport, $1.2 billion for gas transmission pipelines and $8 billion for electricity transmission lines. Challenges to infrastructure funding include: Ensuring that high levels of investment are maintained over many years Balancing investment on capital works, maintenance, renewals and upgrades against investment on reducing/managing demand Selecting the best-value source of infrastructure funding Ensuring that new infrastructure projects receive funding for both the capital works and maintenance.

Sustainability and climate change Infrastructure must contribute to sustainable economic, social and environmental activities. While individual projects in Victoria over the last decade have sustainability as one of their criteria, sustainability has not been prominent in policies and strategies that shape cities, towns and regions. Challenges in improving infrastructure’s contribution to sustainability include: Ensuring that decisions on infrastructure reflect economic, social and environmental criteria Ensuring that decisions on infrastructure reflect the fact that its physical life is typically between 20 and 50 years, but can be over 100 years with refurbishment Designing the infrastructure to operate under changed rainfall, temperature, wind speeds etc, due to climate change Minimising greenhouse gas emissions over the infrastructure’s lifecycle Designing infrastructure so that it can be upgraded at some time in the future Designing infrastructure that maximises the use of recycled elements and minimises total resources use.

Infrastructure performance Infrastructure performance is judged differently by infrastructure owners, operators, users and other stakeholders. Some stakeholders give priority to financial returns, while others on service quality. The Report Card uses a balanced stakeholder assessment. Challenges to improving the performance of infrastructure include: Increasing the supply of infrastructure through the building of new infrastructure or increasing the utilisation of existing infrastructure

The figures include the cost of works to integrate the infrastructure with existing infrastructure.

Overview

Reducing/managing infrastructure demand by methods such as introducing pricing regimes that reflect the fixed cost of provision and time of use Developing infrastructure performance measures that reflect the priorities of all stakeholders Building detailed information on infrastructure demand and supply, and infrastructure conditions to allow for better allocation of resources.

Skills shortages There is a significant engineering skills shortage for Victorian infrastructure. Specific areas experiencing shortages include water, road, electrical and local government engineering. This shortage is likely to increase with time due to the large numbers of engineering practitioners retiring over the next decade, and an inadequate supply of graduates. The consequence of this shortage is delayed and higher cost projects. There is no short term solution to this problem and is common to other States and Territories.

Maintaining informed buyer status by governments Having and utilising technical expertise is a pre-condition to being an informed buyer of engineering, information technology and other technical goods and services. It is crucial that buyers are well informed so that they are able to select and justify the option that offers best value for money; select and justify an innovative solution; reduce contractor risks by providing relevant technical details in tender documents; and prevent contractors taking advantage of the buyer's lack of knowledge. The Victorian Government and local government need to maintain their informed buyer status, which can be challenging due to budgetary constraints and finding appropriately experienced staff.

Infrastructure security and continuity Security risks to infrastructure became apparent following the 11 September 2001 attacks in the US, the Madrid attacks in 2004, and the London attacks in 2005. Continuity risks to infrastructure became apparent during the 2009 heatwaves in Victoria. The community expects that infrastructure security and continuity risks will be appropriately managed. The security and continuity of Victoria’s infrastructure has generally improved this decade; however, there are noticeable inadequacies that are related to the infrastructure’s accessibility, age, condition, level of redundancy and tight supplydemand balance. Challenges to improving the security and continuity of infrastructure include: Managing unrealistic stakeholder expectations for absolute security and 100% supply continuity Ensuring investment in infrastructure security and continuity is focused on the highest risks rather than political or topical risks Maintaining appropriate levels of security and continuity given yearly variation in the frequency of malicious attacks and extreme weather events.

Intelligent infrastructure networks Infrastructure of the future will increasingly be intelligent. Intelligent infrastructure has attached or built-in components (e.g. sensors and cameras) that are able to collect and transmit information about its physical state. This information can be used to identify when water pipes require maintenance, when traffic conditions should be changed to improve flows, and which route motorists should be used to minimise travel time. Currently, very little of Victoria’s infrastructure could be called intelligent, although there are examples such as the M1 Upgrade. (See the M1 case study in the Transport chapter.)

Overview Challenges to building intelligent infrastructure include: Justifying the cost of investing in intelligent infrastructure Designing network-wide intelligent infrastructure systems Manipulating the infrastructure data and providing it to stakeholders in a useful form Providing a process so that third parties can access infrastructure data and exploit it.

Conclusion Victoria’s infrastructure is mostly rated as only adequate meaning major changes are required to enable infrastructure to be fit for its current and anticipated future purposes. This rating reflects that the State’s infrastructure is stressed. In metropolitan areas, this is evident by traffic congestion and public transport inadequacies. In regional areas, it is evident in wastewater treatment problems and inadequate broadband availability. While greater utilisation can be extracted from existing infrastructure by building missing links and instigating demand management, significant investment in new infrastructure is required to address well-known problems in existing areas as well as meeting future demand. Sustaining the necessary high level of investment will be challenging due to the numerous demands for government and private sector investment; however, it is critical that this is done to ensure that Victoria has liveable, productive and sustainable cities, towns and regions.

Overview

TR RAN NSP POR RT Integra ated transport The last de ecade has se een two majo or changes in n transport planning and operation in Victoria. Firstly, tran nsport modess are now se een as compllementary ra ather than competing. Thiis means tha at the goal is to integrate modes to pro ovide a seam mless transpo ort task, whe ether for freig ght or oach, which was w first intro oduced into Victoria’s V pla anning docum ments early this t passengerss. This appro decade, is now central to transport planning, wh hether they are a transport strategies or individual mode strate egies. An exxample of the e implementa ation of integrated transport planning is the developme ent of Victoria a’s Principal Freight Netw work (PFN). This T networkk consists of road, rail and d sea freight corridors tha at link existin ng and new freight activityy centres, su uch as interm modal centress. Road freigh ht movementts will be enccouraged on the PFN and d discourage ed on other roads r through methods su uch as road space alloca ation and trafffic signal con ntrols. The figures at the end of this section sho ow the region nal and metropolitan com mponents of the t PFN. Secondly, transport t pla ans have beccome integrated with land d planning strategies. Thiis developme ent recognisess that the exissting approach of urban sprawl, s unpla anned develo opment, and d failure to reserve lan nd for future transport t exp pansion, resu ults in increa ased congesttion and sociial exclusion and higher transport co osts. Victoria has adopted d a strategic land plannin ng approach which consissts of: Contain ning urban grrowth to within boundarie es Consolidating development in ex xisting areas s resulting in higher densities Concen ntrating econo omic activity and employ yment into ce entres. Key integra ated policy documents arre summarise ed in the table below. Tra ansport mode specific documentss are described in the rele evant section n. Victorian Government trans sport policies and strategies s

Policies and d strategies

Description

Victorian Tra ansport Plan

The VTP setss out practical steps being taken over the short rt, medium and long l term to

(VTP) (2008 8)

transform Vicctoria’s transportt network. It con ntains $38 billion n in investment.

Freight Futu ures: Victorian

Freight Future es is the Victorian Governmentt’s long-term strrategy to shape an efficient and d

Freight Netw work Strategy

sustainable frreight network fo or Victoria that supports s the pro osperity and live eability of the

(2008)

State.

A Fairer Victoria (2008)

A Fairer Victo oria builds on the strategic apprroach set in 200 05 when the soc cial policy action n plan was firstt released. The action plan aims to reduce disa advantage and promote inclusio on and participattion. It includes strategies to en nhance social in nclusion such as s improving access to pub blic transport.

Meeting Ourr Transport

MOTC sets out o an action blu ueprint for Victorria’s transport system into the future. f It provide es

Challenges (MOTC)

specific comm mitments to a nu umber of progra ams and projectts that will advan nce the strategies

(2006)

and priorities included within the MTP.

Growing Vicctoria

GVT is a 10-yyear vision that sets out the Go overnment’s soccial, economic and a environmental

Together (G GVT) (2005)

goals. VicRoa ads has a role in n contributing to o several aspects of the GVT in ncluding creating g safe streets, growing g and link king Victoria and promoting susstainable develo opment.

Linking Melb bourne:

MTP is the Government’s pla an for the mana agement and de evelopment of Melbourne’s M

Metropolitan n Transport

mprove safety, m manage congesttion, manage transport systtem. It includes strategies to im

Plan (MTP) (2004)

metropolitan growth and prom mote economic growth.

Transport Policies and strategies

Description

Melbourne 2030 (2002)

Melbourne 2030 is the Government’s plan for the growth and development of the metropolitan area. It includes policies that are relevant to VicRoads, particularly in developing activity centres, creating networks with regional cities and developing better transport links.

Examples of multi-mode integration are metropolitan integrated ticket systems for train, tram and bus services, and V/Line’s integrated rail and coach activities. Examples of ways being pursued to integrate land planning and transport include: Encouraging infill developments focused largely on activity centres with existing rail stations, and on-fringe developments in existing and new rail corridors Encouraging economic development around activity centres Upgrading the public transport network to link the activity centres Containing urban sprawl by setting an urban growth boundary (this boundary was recently expanded to provide land for an additional 284,000 households)8 Commencement of land reservation and planning for the post 2020 Outer Metropolitan Ring/E6 Transport Corridor (OMR-E6), and planning of early land releases, which integrate with this 100km long road and rail corridor in Melbourne’s north and west, linking Werribee, Melton, Tullamarine, Craigieburn/Mickleham and Epping/Thomastown areas.9 Integration will be accelerated following the modernising of the Planning and Environment Act 1987, the passage of the Transport Integration Bill in 2010 and the use of provisions in the Major Transport Projects Facilitation Act 2009. The Planning and Environment Act 1987 governs the use, development and protection of land in Victoria.10 The Transport Integration Bill aims to ensure that transport projects are integrated and meet land-use objectives. The Major Transport Projects Facilitation Act 2009 will accelerate the delivery of major road and rail infrastructure projects by establishing a one-stop shop for decision making, introducing fixed time limits for decisions, and reducing opportunities for reviews and appeals.11 Key challenges for Victoria in achieving an integrated transport approach are addressing problems caused by the legacy transport networks and historic land-use decisions, and the need to ensure that planning decisions remain true to the integrated strategic vision over many decades. The Principal Freight Network – Regional

Transport

The Principal Freight Network – Metropolitan

Case study: The M1 Upgrade: An example of future infrastructure development New urban transport developments are very expensive, politically difficult and logistically challenging. An alternative is more efficient use of existing infrastructure. The $1.39 billion Monash-CityLink-West Gate (M1) upgrade is an example of the latter. This project involves both civil engineering work and an electronic road management system to optimise traffic flow with the result being significant improvements in road capacity, traffic flow and safety. The upgrade will improve the efficiency of the freeway by increasing throughput by up to 50%, reducing travel times and increasing travel time reliability, and reducing casualty crashes by up to 20%. Traffic flow improvements are being achieved by: Adding additional lanes Installing ramp signals to manage conditions to prevent the main road from becoming overly congested and managing traffic volumes at critical bottlenecks Separating traffic by destination which involves the use of dedicated lanes to improve traffic flows and reduce merging and weaving Providing on-road driver information on lane closures, speed limits and freeway conditions. The M1’s key elements are: Building an additional lane in each direction on the Monash Freeway and Southern Link between the CityLink tunnels and the South Gippsland Freeway Widening the West Gate Freeway between the CityLink tunnels and the West Gate Bridge to reduce weaving and merging movements Implementing a state-of-the-art freeway management system that includes ramp signalling and real time traffic information, and allows VicRoads and emergency services to better manage incidents quickly.

Transport The project is the biggest ever state-funded road upgrade and is being delivered jointly by VicRoads and Transurban. Schematic of the M1 Upgrade

As shown in the figure above, the project has the following four geographic sections: West Gate Bridge Strengthening, expected to be completed in 2011 West Gate Freeway (West Gate Bridge to west of the CityLink tunnels), expected to be completed March/April 2010 Southern Link (CityLink tunnels to east of Glenferrie Road), civil works completed in mid 2010, freeway management system completed in late 2010 Monash Freeway (East of Glenferrie Road to South Gippsland Freeway), completed in late 2009.

Roads s

1.1

Summarry Infrastructu ure type

Victoria 2010 0

Victtoria 2005

National 2 2005

National 2001

Roads overa all

C+

Not rated

Not rated d

National roa ads

C+

C+ +

State roads

C+

C-

Local roads

C-

This rating recognises that t the metrropolitan road infrastructu ure is increassingly under stress due to demand rissing faster than supply. Without W introd ducing metho ods to significantly reduce the gap between su upply and de emand, congestion will co ontinue to risse even further. Roads in regional are eas are mostly just maintain ning their exiisting quality, but will deccline unless investment in ncreases. Since the la ast Report Card, C the major road secto or developm ments have be een: The rele ease of the Victorian V Tran nsport Plan with w its $38 billion b of transport initiativ ves The dev velopment off a transport supply chain n improveme ent blueprint ccalled Freigh ht Futures. Recently co ompleted and in-progress major infra astructure pro ojects include e: Improve ements in roa ad capacity by b grade sep paration, imp proved driver information and signal repriorittisation Enhanc cing the integ gration of roa ad and rail ba ased public trransport, ressulting in an increase in public trransport usage Strategiic road infras structure upg grades such as the comp pletion of EasstLink, Geelo ong Bypass and a M1 upgrade. Challengess to improving road infrasstructure include: Reducin ng road cong gestion and increasing av verage road speeds Maintain ning long-terrm funding fo or roads as per p the Victorrian Transport Plan Improvin ng the quality of municipa al roads and d bridges Delivering integrated d land use and transport planning outcomes.

1.2

Infrastru ucture ove erview

1.2.1

escription System de The Victorian road infra astructure is comprised of: o Freeways (840km) and a freeway tollways (61km) Arterial urban and re egional roadss (21,400km m) Municip pal roads (129,171km) Other minor m roads/trracks (50,000km). The networrk carries mo ore than 41 billion b tonne-km of freightt and provide es for 57 billio on vehicle-km m of travel pe er annum. Alm most all good ds in the metropolitan are ea and more e than 80% of o goods in country Vicctoria are tran nsported by road.15

Transport Victoria’s arterial roads (previously known as main roads) total some 22,300km of roads and 5,250 bridges and major culverts, and are valued at approximately $17 billion.16 There are 11,391 lanekm of urban and 41,480 lane-km of regional arterial roads. Municipal Roads (also known as council or local roads) total 129,171km of which 54,055km are sealed.17 Municipal Roads are the public suburban roads on which most residents live or access property. All maintenance, road safety and traffic measures on them are the responsibilities of local government. The hierarchy of importance for municipal roads, based on traffic volume and function, are: Link Roads that generally have the highest traffic volume and link to arterial roads Collector Roads that channel traffic to Link Roads from local access streets Access Roads that provide the direct access required for residential, commercial, industrial and farming properties where traffic volumes are relatively lower than Link and Collector Roads and direct access is the primary function of the road. Other Roads is a category of non-arterial and municipal roads, and includes tracks in parks and forests. There are some 50,000km of Other Roads and these are the responsibilities of a range of organisations including the Department of Sustainability and Environment, Parks Victoria, and water catchment authorities. Toll roads consist of: Melbourne CityLink (22km) which is responsibility of Transurban EastLink (39km) which is the responsibility of ConnectEast. There are some 3,090 road bridges on the arterial network, of which 885 are metropolitan and 2,205 are regional.18 VicRoads’ bridge assessment management strategy is called the Victoria’s Arterial Bridges: Critical Links for Transport Efficiency. Published in 2002, the asset management strategy is designed to: Optimise accessibility, mobility and freight efficiency in a safe and environmentally friendly manner for the Victorian community Ensure that the bridge assets are managed in a manner that balances road transport needs with maintenance funding. Bridges generally have a nominal design life of 90 years but require significant rehabilitation during their lifetime to ensure that they achieve this. The ages of VicRoads’ bridges are shown in Figure 1.1 and the average age is 40 years. Many of VicRoads’ bridges will require major and expensive maintenance over the next decade to prolong their life.19

Roads Figure 1.1: Age profile of arterial road bridges

800

Number of Bridges

700 600 500 400 300

Poor

Fair

Good

200 100 0 2000s

1990s

1980s

1970s

1960s

1950s

1940s

1930s

1920s

1910s

<1910

The number of bridges which are classed as very poor have remained static, as seen in Table 1.1. b

Table 1.1: Percentage and numbers of bridges classed as very poor condition from 2005/06 to 2009/10 2005/06

2006/07

2007/08

2008/09

Regional

3.3%

2.9%

3.0% (65)

3.2% (70)

Metropolitan

0.9%

1.2%

1.8% (15)

1.2% (10)

2009/10 (target)

Given the age profile and growing freight task, VicRoads has undertaken a continuous program of strengthening and replacement. Table 1.2 shows the number of such projects in the last few years. Table 1.2: Bridges strengthening and replacement projects completed 2005/06

2006/07

2007/08

2008/08

2009/10 (Target)

Bridges strengthening and replacement projects completed

Municipal road bridges are managed by local government. An example of a local government bridge management plan is the Melbourne City Councilâ&#x20AC;&#x2122;s The Bridges of Melbourne City: A Bridge Management Plan 2005-2010.23

1.2.2

Policy and governance The Victorian Government is primarily responsible for the policy, planning and funding of roads in the State. The management, maintenance and development of freeways (excluding freeway tollways), arterial roads and municipal roads are shared between VicRoads and local governments. Funding for roads comes from the Australian, Victorian and local governments. Regulatory and State Government responsibilities will change as a result of the passing of the Transport Integration Bill, which was introduced to Parliament at the end of 2009. The Victorian Government strategic vision for roads is that they contribute to an integrated transport system that strengthens the Stateâ&#x20AC;&#x2122;s economy, liveability, social inclusion and environmental outcomes. Over the long term, the vision is to develop the built environment so that it reduces the need to travel long distances, and to ensure that freight is delivered more efficiently by concentrating freight flows.24

Very poor condition (Level 4 defect level) are bridge components that show advanced deterioration, are acting differently from their intended purpose or are showing signs of overstress. VicRoads may apply load limits to ensure safe operation of these bridges.

Transport Key roads legislations are the: Transport Act 1983. This Act establishes VicRoads and sets out its statutory functions and objectives. Road Management Act 2004. This Act establishes a framework for managing Victoria’s roads. It outlines the rights and responsibilities of road users, principles for road management, and the roles, functions and powers of road authorities, including local councils. Road Safety Act 1986. This Act provides for safe, efficient and equitable road use. It regulates the conduct of road users and articulates provisions for motor vehicle registration and driver licensing. The Act gives VicRoads a range of powers with respect to driver behaviour, driver licensing and vehicle registration. The Australian Government has limited powers under the Constitution to regulate transport. However, it is involved in facilitating national regulatory consistency in roads, developing national transport networks, and providing specific road funding programs. Until 2009, Commonwealth road funding was provided principally under the AusLink (National Land Transport) Act 2005 and, to a much lesser extent, under the Local Government (Financial Assistance) Act 1995 and the Federation Fund. However, in 2009, the Australian Government replaced the term AusLink in its land transport infrastructure funding program with the term Nation Building Program.25 Key Australian Government funding components are: National Projects. These are targeted projects on the National Land Transport Network designed to improve efficiency and safety. In Victoria over the 2008/09 to 2013/14 period, National Projects funding totalled $115.79 million for ongoing projects (principally AusLink 2 projects). $2117.5 million for new projects, $116.7 million for off-network projects and $304 million for road maintenance programs.26 Roads to Recovery. This program addresses the problem of local roads reaching the end of their economic life, and their replacement being beyond the capacity of local government. Victorian councils received $356 million for the period July 2009 to 30 June 2014.27 Black Spot Program. This program improves the physical condition or management of hazardous locations with a history of crashes involving death or serious injury. Victorian black spot projects announced in April 2009 totalled $47.491 million.28 Financial Assistance Grants for roads. Annual Financial Assistance Grants for roads paid directly to local government total $589.7 million in 2009/10. VicRoads is a statutory Corporation of the Victorian Government responsible for road management, safety, licensing and registration. Its purpose is to deliver social, economic and environmental benefits to communities throughout the State by managing the Victorian arterial roads network and its use as an integral part of the overall transport system. Following the 2008 State Services Authority (SSA) Review of the Governance and Operational Capability of VicRoads, their responsibilities were clarified: VicRoads will continue to provide road operational planning and maintenance and road safety, but the Department of Transport will be responsible for strategic transport policy functions and advice and strategic roads planning. Local government is responsible for planning, managing and maintaining municipal roads. It also provides some funding for them via rates and parking fees. Local government is generally responsible for the management and maintenance of the local components of the arterial roads in urban areas such as roadsides, service roads, parking and footpaths as assigned under the Road Management Act 2004.

Roads Sector trends Increasing urban congestion Congestion of roads is a major problem that increases the time and cost of road tasks, which reduces economic efficiency and liveability. In 2005, the cost of congestion for Melbourne was estimated to be $3 billion, increasing by 103% to $6.1 billion by 2020.29 Road congestion is occurring for a host of reasons. These include rapid growth of both population and economic activity, a tendency for road and public transport infrastructure to lag growth, and the lack of congestion-pricing mechanisms.30 The increase in congestion indicators on metropolitan roads is evident in Table 1.3. The trend from 2001/02 to 2008/09 is a continual increase in traffic delays, and a decline in actual travel speeds. The high variability of travel time, which is the difference in travel times experienced due to delay, is a key measure of service quality from the road user’s perspective. Table 1.3: Summary of urban travel data Unit

2001/02

2002/03

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

Traffic Delay: Melbourne am peak

min/km

0.74

0.73

0.70

0.76

0.78

0.82

0.83

0.84

pm peak

min/km

0.63

0.59

0.61

0.66

0.69

0.71

0.72

Variability of Travel Time: Melbourne (% difference of travel times experienced due to delay am peak

21.2

20.8

25.3

19.9

18.9

20.4

n/a

pm peak

19.1

17.3

18.8

17.7

18.6

17.6

18.4

n/a

Actual Travel Speed: Urban am peak

km/h

36.7

36.8

37.4

36.2

35.8

35.0

34.8

n/a

pm peak

km/h

39.3

40.3

39.8

38.5

38.6

38.0

37.4

n/a

The above information is represented graphically in Figure 1.2. Figure 1.2: Traffic delay and actual urban travel speed over the last decade 0.9

38.5

0.8

38 37.5

0.7

37 0.6

36.5

0.5

0.4

35.5

km/h

min/km

1.2.3

Traffic Delay (am peak) Actual Travel Speed (Urban)

0.3

34.5 0.2

0.1

33.5

33 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 200800 01 02 03 04 05 06 07 08 09

Reducing congestion is a key goal for the Victorian Government and VicRoads. In April 2008, the Government announced the $112.7 million anti-congestion plan Keeping Melbourne Moving. This supplements VicRoads’s Congestion Improvements Program. A distinguishing feature of Melbourne’s road network is its shared road space with trams. As a result of congestion, 30% of trams are regularly delayed, with tram speeds reduced to an average of only 16km/h across the network and 11km/h in the central business district.32

Transport Growth in the freight task Almost 90% of freight by volume is moved around the State by road trucks.33 Road freight increased by 54% between 1996 and 2005, measured in tonne-km.34 This is reflected in the growth in the road truck fleet, see Table 1.4. 35

Table 1.4: Victorian road vehicle fleet 1995-2007

Light commercial vehicles (LCVs) with

1995

1998

2007

% Change

363,782

360,037

490,513

+35%

82,674

84,643

93,131

+13%

carrying capacity of less than 3.5 tonnes Rigid trucks Articulated trucks Total

17,399

16,946

22,254

+28%

463,855

461,626

605,898

+31%

Despite the number of light commercial vehicles (LCV), the majority of the freight task is carried by Victoria’s rigid and articulated truck fleet, as shown in Figure 1.3. Figure 1.3: Percentage of road freight (tonnes) carried by vehicle type

Light Commercial Vehicles 9%

Articulated 51%

Rigid 40%

Growth is expected to continue and is expected to more than double by 2020 as seen in Figure 1.4.

(million tonnes)

Figure 1.4: Freight on metropolitan Melbourne’s roads in 2020

20 18 16 14 12 10 8 6 4 2 0 Today

2020

The National Transport Commission’s Twice The Task report warned that the greatest impact of freight growth will be in urban areas, near ports and intermodal freight terminals, and in outer industrial suburbs.

Roads

1.3

Performance

1.3.1

Road safety The quality of road infrastructure influences road safety. According to the Australian Transport Council “improving the safety of roads is the single most significant achievable factor in reducing road trauma”. It notes that “road investment improves road safety through general road improvements — typically, ‘new’ roads are safer than ‘old’ roads — as well as through treatment of black spots”.38 Victoria’s strategy for road safety is called arrive alive 2008-2017. The strategy aims to reduce annual road deaths and serious injuries by 30% by 2017. It is based on the assumption that as road crashes will always occur, the best approach to minimise crashes is through maximising: Safer roads – designing and maintaining roads and roadsides to reduce risk Safer vehicles – encouraging the take-up of vehicles with safety features that reduce the likelihood of a crash and safety features that reduce injury severity Safer road users – advising, educating and encouraging road users to comply with road rules, to be unimpaired and alert, and to drive according to the conditions. These requirements for a multi-pronged approach to road safety have resulted in a coordinated approach being taken which principally involves the Transport Accident Commission (TAC), VicRoads, Victoria Police and the Department of Justice. The two key indicators for road accidents are: Fatality rate per 100 million vehicle kilometres Serious crashes per 100 million vehicle kilometres. Table 1.5 provides details of these indicators. Victoria consistently has achieved a low fatality rate compared with other jurisdictions. However, it is mid-range in terms of serious casualty crash rates. 39

Table 1.5: Road safety indicators* Road safety

Victoria/National

indicator (per 100

Average

2000

2001

2002

2003

2004

2005

2006

2007

10.1

11.3

11.9

10.4

10.5

10.4

10.7

11.4

million vehicle kilometres) Serious Casualty

Vic

Crashes National average Fatality rate

10.7

11.2

10.5

n/a

Vic

0.75

0.87

0.77

0.6

0.65

0.67

0.62

0.57

National average

0.98

0.91

0.89

0.8

0.79

0.76

0.75

* This series is no longer being produced by Austroads.

A 2008 government review noted that while ‘VicRoads argues Victoria’s performance in the road safety area is world class … Norway, Sweden and Switzerland outperform the State on all [fatality and serious casualty crash] measures, suggesting that Australia in general and Victoria in particular may have something to learn from their experience’.40 Figure 1.5 shows the annual road death in Victoria over the last 15 years compared with NSW and the national figures. The annual Victorian road toll between 2004 and 2009 has ranged between 295 and 346.

Transport Figure 1.5: Road deaths in Victoria, NSW and nationally

2500 2000 Vic

1500 NSW

1000

Aus

500 0 2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

For details on road rail crossing safety, see 2.3.5 Level crossing safety.

1.3.2

Road quality Ride comfort is measured by the International Roughness Index (IRI). When the IRI is less than 4.2, travellers consider it a smooth ride. Table 1.6 identifies the proportion of the arterial road network which is defined as smooth. Table 1.6: Proportion of travel on smooth arterial roads 2005/06 to 2009/10 2005/06

2006/07

2007/08

2008/09

2009/10

(expected)

(target)

Regional (%)

Metropolitan (%)

Surface cracking is detrimental to the durability of most road pavements and is a useful indicator of pavement condition. Durability indicates the capacity of road pavements to resist premature deterioration. Table 1.7 identifies the pavement treatment figures. Table 1.7: Pavement treatments, including resurfacing and strengthening 2005/06 to 2009/10 2005/06 Regional pavement treatments

2006/07

2007/08

2008/09

2009/10

(expected)

(target)

n/a

10,151

9,223

n/a

1,968

1,934

12,046

12,098

12,917

12,119

11,157

52,684

53,093

53,163

52,537

52,871

22.9%

22.8%

24.3%

23.15%

21.1%

(thousands of square metres) Metropolitan pavement treatments (thousands of square metres) Total pavement treatments (thousands of square metres) Total Victorian road surface area (thousands of square metres) Pavement treatments to total road surface area (%)

VicRoads has a strategy that targets maintenance on the worst sections. As a consequence, it has been able to keep the percentage of the pavement exceeding the maximum allowable level of roughness (i.e. 4.2 IRI) to around 14%. The Auditor-General’s 2008 Maintaining the State’s Regional Arterial Road Network report stated that ‘there is a build up in the percentage of the network with surface roughness approaching the maximum allowable level’.44 The report noted that while VicRoads is generally efficient in its delivery of maintenance activities, ‘maintenance expenditure has failed to keep pace with inflation, the expansion and ageing of the asset base, higher traffic levels and raised expectations about maintaining the roadside environment’.

Roads Table 1.8 identifies VicRoads’ funding including maintenance. Table 1.8: Funding of VicRoads

Year Ended 30 June

2004 $m

2005 $m

2006 $m

2007 $m

2008 $m

2009 $m

Australian Government Construction

109.7

205.0

259.5

261.5

262.4

215.9

Asset maintenance and minor works

36.5

28.5

43.9

37.5

55.4

58.7

Federal Interstate Road Transport

11.0

11.6

13.8

13.4

14.5

13.4

Scheme National Blackspot program Total Australian Government Funding

10.4

7.1

11.8

10.4

10.2

11.4

167.6

252.2

329.0

322.8

342.5

299.4

400.8

379.7

151.3

148.8

224.3

192.3

State Government Outputs appropriations Contributed capital appropriations

31.9

19.5

88.1

59.4

182.4

439.5

Better Roads Victoria Trust Account

148.4

152.0

863.0

446.3

631.5

569.6

Total State Government Funding

581.1

551.2

1,102.4

654.5

1,038.2

1,201.4

1.7

38.5

102.1

72.7

100.1

126.7

Transport Accident Commission Program Funding VicRoads generated revenue

154.3

185.3

179.3

196.0

246.0

226.2

Total Funding

904.7

1,027.2

1,712.8

1,246.0

1,726.8

1,853.7

Given the level of inflation in the construction sector, the expansion and ageing of the asset base, higher traffic levels and raised exceptions, ‘maintenance expenditure has failed to keep pace’46 Part of the reason for this has been that when bids for new roads were made, they failed to include ongoing maintenance funding. VicRoads now includes an accompanying bid for maintenance on major projects and increasingly for smaller scale projects. Below is an extract from Maintaining the State’s Regional Arterial Road Network which explains the maintenance situation. Over the last four years, the rates of periodic maintenance have been below the revised minimum levels required to cost-effectively maintain the road pavement over the long-term. The 2008–09 State Budget continues this trend and we estimate that planned periodic maintenance will cover 5.7% of all arterial roads compared to the target rate of 6.6%. VicRoads estimates that the cost of raising periodic maintenance coverage by 1% across the state is approximately $15 million. Between 2001–02 and 2007–08 the maintenance program allowed for the rehabilitation of between 0.2 and 0.5% of the Victorian arterial road network. In 2007–08 the coverage rate of 0.2% implied an effective life of 500 years for these pavements. VicRoads estimates that works in other parts of the 2007–08 roads program increased the rehabilitation rate to about 0.45%, implying a pavement life of 220 years. In the 2008–09 budget pavement rehabilitation coverage is similar to the level funded in 2007–08. A more realistic figure for the time that road pavements can perform adequately between rehabilitation treatments is around 70 years. Adopting this standard would require the rehabilitation of an additional 0.95% of the arterial road network. VicRoads’ preliminary estimates indicate that the cost of raising rehabilitation coverage by 1.2% across the State’s arterial roads is approximately $80 million. We found that VicRoads’ target periodic maintenance and rehabilitation coverage rates are consistent with sustaining the condition and performance of the road pavement over the long term. We examined VicRoads’ maintenance program costs and estimated that an additional $77 million per year would be needed to achieve the required levels of coverage. This includes about:

$14 million to raise periodic maintenance coverage from 5.7 to 6.6%

$63 million to raise rehabilitation coverage from 0.45 to 1.4%.

The Municipal Association of Victoria (MAV) runs the MAV Asset Management Step Program which is used for asset management by local governments. The MAV Step Program allows for the 21

Transport State-wide assessment of municipal assets. Between 2006 and 2009, its index measuring the quality of local roads has decreased by 2%, indicating a drop in quality. The MAV analysis notes that the immediate risk areas on local roads are being addressed in rural areas but there are less funds than are necessary for the required long term renewal. Between 2006 and 2009, its index measuring the quality of bridges has increased by 3%, indicating an improvement in quality. The MAV analysis notes that investment in bridges is meeting renewal need.48

1.3.3

Environmental sustainability A key objective in Victoria’s transport policy is to reduce greenhouse gas emissions from the transport sector by encouraging mode shift from road transport which accounts for almost 90% of transport emissions.49 The action being pursued to reduce greenhouse gas production from transport by the Victorian Government includes: Reducing the need to travel without sacrificing people’s access to opportunities and industry’s need to move goods Using less-polluting forms of transport more often for passenger and freight traffic 50 Ensuring that all forms of transport are as greenhouse-friendly as possible. The Victorian Transport Plan and the 2009/10 Budget initiatives to achieve the above include: Improving public transport $100 million increase in funding for bicycle lanes and shared walking and cycling paths on priority bicycle routes A $5 million public bicycle hire scheme for inner Melbourne 51 Setting a mandatory carbon emissions target for the Victorian Government vehicle fleet. Actions by VicRoads to enhance sustainability include: The development of a framework for determining the carbon footprint of a road construction project to deliver VicRoads’ first carbon neutral road construction project, the Mickleham Road duplication at Greenvale Implementing a sustainability rating system to encourage a triple bottom-line approach Constructing innovative fauna crossings, such as those on the Calder Freeway. Ongoing environmental challenges include: Vehicle emissions and greenhouse gases Water quality from road run-off Noise Alienation of land.

1.4

Future challenges The future challenges to achieving improvements in road infrastructure are: Reducing road congestion and increasing average road speeds. In the short to medium term, congestion is likely to increase and average road speeds are likely to decrease. Efforts to shift travel to other modes, such as rail and cycling, will only have a marginal impact due to constraints such as limited metropolitan rail capacity. Innovative methods are required to reduce demand including using congestion pricing, reducing just-in-time logistic practices and encouraging working locally. Supply augmentation in built-up areas will increasingly involve improving road asset utilisation rather than building new roads. Ways to improve efficiency are targeting roadworks on points of connection, building links between existing road networks, minimising the impact of road works, ensuring quick clearance of traffic incidents, improving

Roads

traffic signal coordination, and prioritising road space high occupancy vehicles or ‘high value’ movements. Maintaining long-term funding for roads as per the Victorian Transport Plan. The Victorian Transport Plan includes an ambitious program of roads projects which will cost some dozens of billions of dollars. While recent expenditure on roads has increased significantly, maintaining this high level will be essential for the foreseeable future if the Plan is to be achieved. Key projects will include: Construction of Peninsula Link, a 25-kilometre, four lane connection between EastLink at Carrum Downs and Mt Martha at an estimated cost of $750 million Extension and improvement of outer suburban arterial roads costing some $1.9 billion Completion of the ‘missing link’ in the Metropolitan Ring Road – a connection between the Eastern Freeway at Bulleen and the Metropolitan Ring Road in Greensborough at a cost of more than $6 billion Construction of an alternative to the West Gate Bridge –a tunnel between Geelong Road/Sunshine Road and Dynon Road/Footscray Road at a cost of more than $2.5 billion Completion of the next stage of the Dingley Arterial linking Perry Road and Springvale Road at Westall Road, costing $80 million Development of a Truck Action Plan in stages to remove thousands of trucks from innerwestern suburban streets, including building a new connection from the West Gate Freeway to Hyde Street/Whitehall Street linking to the port at a cost of $380 million for Stage 1 52 Grade separating of key junctions on Hoddle Street. Australian Government funding will be essential in achieving these projects. Although the Australian Government’s Nation Building Program initiatives announced in May 2009 did not fund any Victorian road-specific projects, it identified the following projects as ones which may gain future support: Donnybrook Inter-modal Terminal, and the Green Triangle Road Upgrades. This recognition means that they are more likely to be funded in the future. Improving the quality of municipal roads and bridges. Municipal Roads are facing the following three main problems: Maintaining road quality in the face of greater freight volumes. Many municipal roads were not designed for large loads and the amount of tonnage they currently carry, nor do local governments have the ability to fund their maintenance Developing roads that provide acceptable access without encouraging excessive traffic and speed, while providing road access for larger vehicles such as garbage trucks and fire trucks Maintaining bridges. Local governments have responsibility for a large number of timber bridges that are deteriorating. For example, in the Gippsland region there are approximately 599 bridges maintained by local government. Of these bridges, 75% of the total bridge deck area is timber. Timber deck bridges cost approximately double the amount required by concrete bridges to maintain per annum.53 Maintaining these bridges is very costly for local governments. Addressing these problems requires greater visibility of asset quality across all local governments, and increased funding. Delivering integrated land use and transport planning outcomes. Implementing integrated plans will require overcoming the following major challenges: Ensuring that land-use decisions to slow the growth in urban boundaries, reserve land corridors for future roads, and focus on building in designated growth corridors are maintained over many decades Implementing the principal freight network which is dependant on private sector supply chain organisations planning their operations to align with the network, such as locating assets in the freight activity centres Increasing significantly the amount of funding for both new roads and maintenance.

Transport

1.5

Report Card rating Infrastructure type

Victoria 2010

Victoria 2005

National 2005

National 2001

Roads overall

C+

Not rated

National roads

C+

State roads

C+

C-

Local roads

C-

Based on considerations of planning, funding, and infrastructure capacity and condition, Victoria’s overall road infrastructure has been rated C+. This rating recognises that the metropolitan road infrastructure is increasingly under stress due to demand rising faster than supply. Without introducing methods to significantly reduce the gap between supply and demand, congestion will continue to rise even further. Roads in regional areas are mostly just maintaining their existing quality, but will decline unless investment increases. Positives that have contributed to the rating are: The delivery of several strategic road infrastructure upgrades Increase in funding for roads The release of an integrated transport plan that places roads within a broader transport task The policy integration of road and land-use developments Increased quality of data on municipal road condition and assets. Negatives that have contributed to the rating are: Increased road congestion and reduced travel time Static or declining quality of municipal roads Lack of committed forward funding of many road projects Lack of comparable data on all road assets in Victoria, regardless of its owner and funding source Lack of planning to address gaps in urban network connectivity, notably, for example, Westlink and North East link Limited deployment of intelligent transport systems.

Rail

2.1

Summarry Infrastructu ure type Rail

Victoria 2010 0 D

Victtoria 2005 C- Overall O

National 2 2005

National 2001

C-

D-

D Frreight

This rating recognises that t that therre has been no fundamen ntal improvement to the metropolitan m rail networkk since 2005 5, although th here are a nu umber of projjects underw way that shou uld deliver improveme ents. Over the long-term, a complete modernisatio on of metropolitan rail is required r to meet the siignificant inccrease in dem mand expecte ed from risin ng population n and public transport t use e. While impo ortant regiona al rail segme ents have imp proved, quality is still belo ow what is needed n for ra ail freight to in ncrease its market m share.. Less used elements e of the t regional rail network remain inadequate e. The qualityy of the tram network is im mproving butt is still inade equate in term ms of averag ge speed and capacity. Since the la ast Report Card, C the major rail sectorr developments have bee en: The com mmencemen nt of four Reg gional Fast Rail R routes wh hich carry tra ains capable of travelling at 160km/h hr Starting g the rebuildin ng of the reg gional freight network The com mmencemen nt of revised and a longer-te erm franchisee leases for the metropolitan passeng ger rail and tram t networkks The imp plementation of targeted measures to o reduce congestion and improve the service of metropo olitan passen nger rail The ach hievement off the Victorian Governme ent’s 2002 tarrget to double the share of o motorised d trips ma ade in Melbourne by publlic transport to t 20% by 20 02054 The enttry of severall competing above-rail a op perators follo owing the intrroduction of the t regional rail access regime The Vic ctorian Goverrnment’s buyy-back of the regional raill network, co ompleted in May M 2007, wiith V/Line now n managin ng both the regional r rail network n and passenger train operatio ons on that networkk High lev vels of conge estion along a number off heavy rail ro outes, notablly Sydenham m corridor, western n and northerrn lines, the Dandenong D line, and the Sunshine-F Footscray-No orth Melbourn ne lines Overcro owding on a number of tra am routes. Recently co ompleted and in-progress major infra astructure pro ojects include e: The com mmencemen nt of the $4.3 billion Regio onal Rail Link project, the e first new major railway line in 60 6 years The electrification off the track fro om Broadme eadows to Crraigieburn (completed in 2007) Restora ation of the ra ailway to Ech huca (comple eted in 2006)) Stage One O of the Stt Kilda Road tram improv vement strate egy, providing g platform sttops and new w tracks in n the Arts Prrecinct (comp pleted in 200 08) Tram ov verhead pow werlines renewed along 55km of doub ble track Purchas se of new rollling stock. The T Governm ment has orde ered 38 new metropolitan n trains, whicch started entering servvice progresssively in earlly 2010 as pa art of a comm mitment to pu urchase a total of up to 70 new mettropolitan trains. 54 VLoc city carriagess are currently on order and are being g delivere ed progressivvely at the ra ate of one a month m Delivery y of the new metropolitan n train contro ol (Metrol) sysstem 25

Transport

Rollout of the myki contactless smartcard ticketing system Construction of the South Morang Rail Extention.

Challenges to improving rail infrastructure include: Reducing metropolitan rail congestion and improving services Maintaining long-term funding for rail as per the Victorian Transport Plan Improving the interstate and regional freight rail lines, and their intermodal connections Delivering integrated land use and transport planning outcomes Commissioning and implementation of the myki ticketing system.

2.2

Infrastructure overview

2.2.1

System description The Victorian rail infrastructure is comprised of: Melbourne metropolitan heavy rail passenger network (366km of track and 211 stations) Metropolitan tram (light rail) passenger network (249km of track, 1,800 stops and 496 trams) Regional rail network (intrastate), which carries both freight and passengers within Victoria (2,877km mostly broad gauge network consisting of 1,483km of passenger tracks and 1,394km freight only tracks) Defined Interstate Rail Network, which consists of the Victorian sections of the interstate rail system between Albury, Melbourne and the SA border, used mostly by freight trains with some interstate passenger services (1,384km). Figure 2.1 identifies Victoria’s rail networks. 55

Figure 2.1: Victoria’s rail network

Rail Metropolitan heavy rail network The metropolitan network is run by a franchisee that operates a fleet of over 300 trains and provides 12,909 services each week resulting in 214 million customer trips per year.56 Over 213 million passenger trips were undertaken on the metropolitan train system in the 2008/09 financial year.57 Train services across Melbourne operate as part of an integrated system of train, tram and bus services. The ticketing system operates across services and offers a two-zone, time-based fare structure. Metropolitan tram network Melbourne has one of the world’s most extensive tram (light rail) networks, providing 5,080 weekday services to 27 routes (excluding the free City Circle service).58 178 million passenger trips were undertaken on trams in 2008/09.59 Regional rail network About 60% of the regional rail network carries only freight services, with the remainder carrying both freight and passenger services. Total train journeys cover around 6.8 million kilometres each year, made up of passenger services (71%), grain (11%) and other freight (18%).60 The V/Line passenger network operates 1,248 rail services every week across regional Victoria. The station network includes 81 stations, supported by a network of agents providing access to V/Line tickets and services.61 Regional Victorian freight trains operate on the V/Line and metropolitan passenger networks to gain access to the ports of Melbourne and Geelong, the Dynon freight terminals and other metropolitan terminals (Brooklyn, Sunshine, Kensington and Springvale). Freight trains generally operate outside peak periods and are scheduled to fit in with passenger train operations without delaying passenger trains. Defined Interstate Rail Network The Australian Rail Track Corporation (ARTC) is responsible for the Defined Interstate Rail Network which is leased to it by VicTrack. This network is predominantly for freight services with the only passenger services at present being the Melbourne-Sydney daily service and the Melbourne-Adelaide service that operates three times per week. This network is of national importance as the Melbourne-Sydney corridor is the busiest interstate freight corridor in Australia with freight volumes expected to increase from 10.3 million tonnes to around 25 million tonnes by 2029. The Melbourne-Adelaide-Perth rail corridor carries more than 80% of all freight between Melbourne and Perth. The Victorian interstate rail network consists of 1,213km of standard gauge track between Albury, Melbourne and the South Australian border, and the 171km Portland to Maroona standard gauge rail line.62 The ARTC leases the two mainline interstate and standard gauge corridors from the Victorian Government which are from Southern Cross Station to Albury (NSW) and from Tottenham Junction to Wolseley (SA). The ARTC is responsible for selling access to train operators, capital investment in the corridors and management of infrastructure maintenance. Metropolitan train franchisee From December 2009, Metro Trains Melbourne became the metropolitan train franchisee for eight years with an option to extend its term for a further seven. Metro Trains Melbourne is a joint venture between Hong Kong’s MTR Corporation Ltd, and the Australian companies John Holland Melbourne Rail Franchise Pty Ltd (John Holland) and United Group Rail Services Ltd (UGL). Metro Trains Melbourne’s responsibilities include: Delivering passenger services that are safe, reliable, punctual, clean and convenient, and operated as part of an integrated multimodal transport network 27

Transport

Maintaining the electrified suburban train network Overseeing the maintenance of the metropolitan electrified train fleet which is outsourced to: United Melbourne Transport Ltd (UMTL), a subsidiary of the United Group, which is responsible for the X’Trapolis trains built by Alstom and the older trains (Hitachi and Comeng) in the fleet Siemens Rail Services Bayside Pty Ltd, a subsidiary of Siemens, which is responsible for the remainder of the new train fleet.

The franchising of the metropolitan train network started in 1999 when the network was shared between two franchisees, Bayside Trains (then owned by National Express) and Hillside Trains (owned by Connex). Connex was the sole franchisee from 2004 to 2009. Metropolitan tram franchisee From December 2009, Keolis Downer EDI (KDR) became the metropolitan tram franchisee for eight years with an option to extend its term for a further seven. KDR is a consortium between Keolis, a subsidiary of the French public enterprise railway company SNCF, and Australian maintenance provider Downer EDI. KDR’s responsibilities include: Maintaining the tram network in Melbourne including tram lines and tram stops Maintaining the older trams in the fleet Overseeing the maintenance of the low floor trams which is outsourced to: Siemens Rail Services Swanston Pty Ltd for the Siemens Combino trams (D1 Class 3 and D2 Class 5 section low floor trams) United Group Melbourne Transport Ltd (UMTL) for the Alstom Citadis trams (C-Class low floor trams).63 The franchising of the tram network started in 1999 when the network was shared between two franchisees, Swanston Trams and Yarra Trams. In 2004, Yarra Trams took responsibility for the entire Melbourne tram network. Regional train operator and owner From May 2007, V/Line Passenger Pty Ltd (V/Line) has been responsible for providing passenger trains and freight services. V/Line’s responsibilities include: Maintaining the Victorian regional rail network train network including both the freight-only and regional passenger networks; this includes some non-electrified, broad gauge freight-only lines in and around Melbourne including to the Port of Melbourne Maintaining the country passenger train fleet which is outsourced to: Bombardier, responsible for the VLocity trains EDI, responsible for the rest of the fleet. Third party freight operators on the regional network include Asciano/Pacific National and Toll.

2.2.2

Policy and governance The Victorian Government is ultimately responsible for the State’s rail policy, capital investment, most maintenance funding, and performance oversight of the metropolitan and regional rail networks. It also owns the vast majority of rail land and infrastructure. The metropolitan tram and train networks are operated under franchisee arrangements where the operators are responsible for passenger service delivery, infrastructure maintenance and rolling stock maintenance. The regional rail network is operated by the government owned V/Line Passenger Pty Ltd (V/Line), and is responsible for its operation and maintenance. The Regional Network and Access (RNA)

Rail division of V/Line is responsible for the provision of access to other freight and passenger train operators. Regulatory and State Government responsibilities will change as a result of the passing of the Transport Integration Bill, which was introduced to Parliament at the end of 2009. The Victorian Government’s strategic vision for rail is that it should play a much greater role in the State’s transport task. This will reduce road congestion, improve the liveability of Melbourne, reduce negative environmental consequences of transport, and enhance economic activity. Victoria’s rail transport legislation is comprised primarily of the following Victorian Acts: Rail Safety Act Transport Act 1983 Rail Corporations Act 1996. Key multi-jurisdictional bodies and government agencies are: Australian Rail Track Corporation (ARTC), which operates the Defined Interstate Rail Network. Department of Transport (DOT), the lead agency responsible for the development and management of the public transport network in Victoria. Key divisions and authorities are: Public Transport Safety Victoria, responsible for improving rail safety including providing accreditation for train and tram operators Transport Ticketing Authority, responsible for overseeing Victoria’s public transport ticketing system contract as well as procuring and managing the new ticketing system for Victoria64 VicTrack, responsible for rail and tram land and below-rail infrastructure owned by the Victorian Government. VicTrack leases the infrastructure to the Director for Public Transport within DOT. VicTrack also owns the majority of rolling stock (trains and trams) that operate on the metropolitan system. Some yards and terminals in metropolitan Melbourne are also managed by VicTrack.65 66

2.2.3

Sector trends Growth in passenger numbers Both the metropolitan and intrastate networks have experienced considerable passenger growth over the last decade, with a rapid increase in patronage since 2005/06. This growth is due to Melbourne’s increasing population, inner city growth where public transport is more accessible, rising CBD employment, petrol price fluctuations and the impact of the global financial crisis on spending patterns. Changes to the ticket system, notably the removal of Zone 3 from the metropolitan ticketing system, have also made public transport more attractive. Melbourne’s train patronage has grown by more than 70% in the last decade, including more than 50% in the past four years. This contrasts with the decade before 2005 when patronage growth rate was 1% to 3% per year. Prior to 2005, population growth was the biggest driver of increased patronage. Since 2005, growth has exploded, which indicates that non-population trends are dominating.67 Table 2.1 below details the patronage for metropolitan trains and trams over the last decade.

Transport Table 2.1: Annual patronage for metropolitan trains and trams Financial Year Financial Year

Metropolitan rail

Metropolitan trams

Boardings (million)

Annual Growth (%)

Boardings (million)

Annual Growth (%)

1998-99

118.0

4.4

120.4

3.1

1999-00

124.2

5.3

127.3

5.7

2000-01

130.3

4.9

129.4

1.6

2001-02

131.8

1.2

131.9

1.9

2002-03

133.8

1.5

134.7

2.1

2003-04

134.9

0.8

135.9

0.9

2004-05

145.12

4.01

145.32

2.01

2005-06

159.13

9.73

149.63

2.93

2006-07

178.6

12.2

154.9

3.6

2007-08

201.2

12.7

158.3

2.2

2008-09

213.9

6.3

178.1

12.5

Patronage on the regional rail networks increased by more than 70% over the past four years. Key reasons for this include the completion of the Regional Fast Rail project in 2006, the average 20% V/Line fare reduction from March 2007, and frequency improvements.69 Passenger growth is expected to continue due to population growth, and cost, travel time and environmental reasons. Growth in freight During the late 1990s and until the mid-2000s, regional rail freight traffic declined by an estimated 20%.70 One of the key reasons for a lack of investment in rail infrastructure occurred because of the nature of the lease signed in 1999 with Freight Victoria Limited and the Victorian Government. This lease contained no specific obligations in the short to medium term for the track lessee to continuously maintain the freight-only rail network to any particular standard. As a result, minimal maintenance occurred because such investment resulted in little benefit to the lessee. The consequence was that about 10% of the network became inoperable and most of the rest was subject to speed restrictions of 50km/h or less due to very poor sleeper condition. c 71 The recognition that maintenance was urgently required to prevent massive future rehabilitation costs resulted in the State Government providing $25 million in 2006/07 for essential track maintenance work.72 The rebuilding of the regional freight network accelerated following the work of the Victorian Governmentâ&#x20AC;&#x2122;s Rail Freight Network Review Taskforce. Its 2007 report, Switchpoint: The template for rail freight to revive and thrive! contained 29 recommendations, many of which have been or are being implemented, such as the reduced rail access fees for grain transport and a targeted investment program in the freight-only rail network, notably the gold and silver line upgrades. As a result, regional rail freight continues to grow. Increased capital and maintenance expenditure During the 1990s and early 2000s, there was massive under-investment in railways, closure of rail lines and a decrease in government subsidy for operations and maintenance of networks.73 This led to a fall in the service levels on many rail lines and a massive backlog of maintenance. Since 2004/05, the investment in rail has increased substantially to address past shortfalls as illustrated in Figure 2.2.

In 1999, the regional rail network was leased for 15 years to Freight Victoria Limited (later known as Freight Australia). In 2004, when Pacific National purchased the owner of Freight Victoria, the Director of Public Transport in DOT consented to the change of control of ownership to Pacific National. Following the withdrawal of National Express in late 2002, and with the imminent delivery of the Regional Fast Rail project, the State decided to retain V/Line in public operation at that time.

Rail 74

es tim at 20 ed 09 /1 0 bu dg et

/0 8 20 08

/0 9

20 07

/0 7 20 06

20 05

/0 6

/0 5 20 04

/0 4 20 03

/0 2

/0 3 20 02

20 00

19 99

20 01

/0 1

800 700 600 500 400 300 200 100 0 /0 0

Dollars ($m)

Figure 2.2: Capital expenditure on rail

Maintenance has also increased as illustrated in Table 2.2 below. 75

Table 2.2: Annual expenditure on network maintenance ($ millions) Financial Year

Metropolitan (Connex)

Regional (V/Line)

TOTAL

2005/06

$145

$129

$275

2006/07

$157

$163

$321

2007/08

$170

$180

$350,

2008/09

$205

$196

$402

Maintenance on metropolitan rail and trams will increase over the next few years because the new franchising regime specifies that franchisees are required to increase maintenance expenditure which is also supplemented by a 50% increase in State Government funding.76

2.3

Performance

2.3.1

Passenger service network performance Key parameters to assess the performance of passenger services are efficiency, levels of service and safety/security. Due to the recent change in franchisees, insufficient information is available to assess the quality of their performance. Consequently, the information below relates to the previous franchisees. Performance in the short-term is likely to be similar to that of the recent past due to the inability to rapidly improve legacy infrastructure and operating processes.

2.3.2

Efficiency There are no simple measures of efficiency for rail networks. Evaluations of efficiency are made by comparing past with current performance, or by comparing similar elements of rail sectors across jurisdictions. Below are two findings that reflect on Victoria’s rail network: A 2008 NSW Independent Pricing and Regulatory Tribunal (IPART) report concluded that by using a number of measures, efficiency levels on Melbourne’s heavy rail network are markedly higher than Sydney’s in all aspects of service delivery.77 Specifically, Connex was found to be more efficient in terms of infrastructure maintenance, rolling stock maintenance, crewing, station staffing and head office overheads.78 A 2005 Victorian Auditor-General report into the franchising of Melbourne’s train system found that ‘the current train and tram franchise agreements represent reasonable value-for-money (assuming that franchisee performance meets contracted levels)’.79

Transport 2.3.3

Levels of service The DOT sets and monitors the performance levels that each of the franchisees needs to meet. The targets are primarily: Punctuality, measured as a percentage of the services arriving on time at specified monitoring points Reliability, measured as a proportion of the timetabled train or tram services that have run Customer satisfaction, measured through surveys that include questions about service delivery, personal safety and passenger comfort.80 Table 2.3 below lists reliability and punctuality performance. Table 2.3: Reliability and punctuality performance Vehicle

Performance measures

Actual (Dec 2008 to Dec 2009)

Metropolitan

In each financial quarter Metro Trains Melbourne is required to:

• 1.2% network cancellations

trains

• deliver at least 98% of the timetable each month

• 1.4% timetable not

• ensure that at least 87% of services arrive at their destination no later than four minutes and 59 seconds after the timetabled arrival time.

delivered • 90.5% train punctuality ontime to 5:59 • 86.5% train punctuality ontime to 4:59

Regional trains

In each financial quarter V/Line Passenger rail services is required

• 1.9% cancellations

to:

• 86.7% train punctuality on-

• deliver at least 96% of scheduled train kilometres

time

• ensure that at least 92% of services arrive at their destination no later than five minutes and 59 seconds after the timetabled arrival time for short distance services and ten minutes and 59 seconds after the timetabled arrival time for long distance services. Metropolitan

The delivery of tram services in Melbourne can be significantly

• 0.2% network cancellations

trams

affected by road traffic. Therefore, punctuality of trams is

• 0.8% timetable not

measured as an average of the performance at three of five monitoring points along the route. For any given monitoring point a service is considered on-time where it arrives no earlier than 59 seconds before and no later than four minutes and 59 seconds after the timetabled arrival time. In each financial quarter the performance standards for Yarra Trams are that: • the average punctuality of services must be at least 77% • the per cent of timetable delivered must be at least 98%

delivered • 74.7% tram punctuality at destination on-time to 5:59 • 69.8% tram punctuality at destination on-time to 5:59 • 83.9% average tram punctuality over length of route on-time to 5:59 • 80.6% average tram punctuality over length of route on-time to 4:59

If the franchisees fail to meet performance measures, they can be fined. For example, over the 2008/09 financial period, V/Line was fined over $1.6 million.83 Hot weather continues to be a major cause of train cancellation and delays, such as observed in January 2010. A key factor in customer satisfaction is overcrowding on trains. Based on Metlink’s attitudinal surveys, overcrowding consistently sits behind ‘service reliability’ in the factors influencing satisfaction with services.84 The massive increase in patronage on metropolitan trains has increased overcrowding, peaking in 2008 but still very high in 2009. Overcrowding results are seen in see Figure 2.3.

Rail Figure 2.3: Overcrowding measures

Greensborough - Westgarth Belgrave - Heathmont Williamstow n - North Williamstow n

Number of Rolling Hours

Glen Waverley - Heyington Sandringham - Prahran

Lillydale - Ringw ood East Hurstville - Montmorency 30

Frankston - Glenhuntly Epping - Rushal

Cranbourne - Merinda Park Craigieburn - Kensington Werribee - Seddon

Sydenham - Middle Footscray Pakenham -Halam

0 2004

2005

2006

2007

2008

2009

Dandenong - Carnegie

There is widespread recognition that the metropolitan and to a lesser degree the rural passenger network has reached capacity in many areas, and is suffering severe congestion and providing inadequate service. For example, Metlink notes that the ‘current level of passenger congestion on the metropolitan train system is unsatisfactory … and the impact of overcrowding is more pronounced in Melbourne than other cities – 43% of people in Melbourne are discouraged from using public transport because of overcrowding (Sydney and Brisbane 32%, Adelaide 27%, Perth 26% and Canberra 16%)’.86 The Victorian Government has stated that ‘many metropolitan lines are now operating at or near the limits of their practical capacity’.87 The lines suffering most congestion are: The Sydenham corridor, where the practical track capacity was effectively exhausted when additional metropolitan services were added in November 2008 The western and northern lines (the Northern Group) and the south-eastern lines (the Caulfield Group) which will reach their practical capacity limit within five years 88 The Dandenong line The Sunshine/Footscray/North Melbourne corridor where all three of V/Line’s western lines come together with metropolitan services and use the same track to enter Southern Cross station. Some tram routes are also suffering overcrowding and the current fleet is insufficient to address forecasted growth.89A key cause of this is road congestion which makes trams on shared road/tram lines delayed and unreliable. While many cities have trams in fully segregated lanes, in only 50km of the 249km tram network in Melbourne do trams have exclusive right of way.90

2.3.4

Safety and security Ensuring the pre-eminence of safety in rail operations, given the massive growth and pressure to meet service performance targets, is a continue challenging for rail services. To enhance safety, the Victorian Government introduced a new safety regulatory regime that came into effect on 1 August 2006. It required the accreditation of all commercial operators by 1 July 2008, which was achieved.

Transport As the passenger rail networks and to a lesser degree, other rail networks, are relatively accessible and have been the target of terrorist attacks overseas, rail networks are considered potential terrorist targets. To address this risk, the Victorian Government introduced the Terrorism (Community Protection) Act in 2003. This requires rail organisations to develop specific counterterrorism risk management plans and undertake a training exercise to test the operation of their plan at least once a year. The counter-terrorism response designed to ensure continuity of service and rapid recovery has been built upon by rail organisations to increase the network’s protection from an ‘all-hazards’ and ‘extreme events’ perspective. As this can only be achieved through sector-wide coordination, a Transport Sector Committee of the Victorian Government’s Security and Continuity Network was established. This committee meets regularly and is chaired by the Security and Emergency Management Division of DOT. The committee consists of the Emergency Planning Coordinators from the franchisees, V/Line Passenger, Pacific National, Australian Rail Track Corporation (ARTC), VicTrack Access, Southern Cross Station Authority, Bus Association Victoria, and representatives from Victoria Police and emergency services agencies. Awareness of the need to improve continuity of service and rapid recovery was raised following the 2008 Oaks Day rail disruption. This left about 50,000 Oaks Day race-goers stranded during peak hour when an overhead deficiency resulted in power being cut to the line and two other suburban rail services. Key recommendations resulting from the incident included ready-to-roll emergency plans, modified command control structures, rapid staff mobilisation and communications to provide clear information about modified services to the travelling public as early as possible.91 In the new metropolitan rail franchise, the Victorian Government has stated that it requires increased expenditure on maintenance and renewals from 1 December 2009 as this will build ‘greater resilience to the impacts of extreme weather’.92

2.3.5

Level crossings safety The metropolitan network has a high number of level crossings compared with other States. For instance, Melbourne has 180 level crossings across the metropolitan electrified suburban train system compared with two in the entire Greater Sydney area. There are 62 sites on the network where there is a level crossing or pedestrian crossing within 100 metres of the end of the platform.93 The large number of level crossings poses road and rail safety risks and increases road congestion on key roads. Across Victoria, there are about 1,100 rail level crossings that still have passive protection measures. Between 1 January 2001 and 30 June 2008, there have been 220 road vehicle collisions at Victorian level crossings. There have been 578 across Australia over the same period. The Australian Government has provided $30.3 million over 2008/09 and 2009/10 to fund the installation of boom gates, flashing lights and pedestrian gates at 59 high-risk rail level crossing sites across Victoria.94

2.3.6

Rail Rail operators are also contributing to the mode shift by highlighting the environmental benefit of rail transport to passengers. An example from the previous franchisee was Connex’s Carbon Calculator that works out the CO2 emissions for a travel journey and identifies the impact that choosing public transport has. Reducing resource consumption has also been important from a financial, environmental and reputation perspective. An example of this is Yarra Trams’ greendepot program. The program included a range of water reduction measures that resulted in saving 4.09 million litres of water each year.96

2.4

Future challenges The future challenges to achieving improvements in rail infrastructure are: Reducing metropolitan rail congestion and improving services. While congestion has decreased recently, overcrowding and delays are likely to return as passenger numbers rise. The Victorian Government, in conjunction with the rail operators, is undertaking a range of initiatives to address these problems. These include increasing the utilisation of the existing network, more funding for maintenance, and targeting medium-sized investments. Medium sized projects, such as new rail vehicles, will result in improvements, but not for several years. For example, it takes a minimum of three years to manufacture, deliver and commission a new train assuming that there is an existing production line.97 The Victorian Government has responded slowly and generally provided insufficient investment to address the problems. As many metropolitan lines are reaching capacity, the only ways to significantly increase capacity are by building major additional lines, large-scale duplication, expanding the rail fleet, rebuilding signalling and control systems, and/or redesigning the network to allow very high frequency services. Maintaining long-term funding for rail as per the Victorian Transport Plan. The Victorian Transport Plan includes an ambitious program of rail projects that will cost some dozens of billions of dollars. While recent expenditure on rail has increased significantly, maintaining this high level will be essential for the foreseeable future if the Plan is to be achieved. Key projects will include: Metro Stage 1, which consists of a rail tunnel under Melbourne between Dynon and St Kilda Roads at the Domain, doubling the Underground Loop capacity for the western and northern lines. It also includes a new station at Parkville.98 The Australian Government, under the May 2009 Building Australia initiative, has provided $40 million funding for preconstruction work on this tunnel. Work is under way to determine the final tunnel alignment. Over $4.5 billion will be required to build the tunnel and funding for this has not been confirmed.99 Regional Rail Link project, which is the largest investment in regional rail ever in Victoria. It is fully funded with both State and Australian Government contributions. It will reduce congestion and safety risk along Melbourne’s western rail lines that carry both regional and metropolitan trains to Southern Cross Station. The $4.3 billion Regional Rail Link project was announced in May 2009 as a joint Victorian and Commonwealth Government project funded under the National Building program. The project involves a 40km dual track link from West Werribee to central Melbourne’s Southern Cross Station via Sunshine, and the construction of a new rail line from Werribee to Deer Park. Work has started on lengthening Platforms 15 and 16 at Southern Cross Station as part of a $35 million program of station works including installation of lifts, escalators, systems, a platform canopy, finishes and furniture (expected completion at the end of 2010).100 Improving the interstate and regional freight rail line, and their intermodal connections. The Australian Government, via its 2009 Nation Building package, is enhancing the Defined Interstate Rail Network with the following projects: Seymour-Wodonga Track Upgrade, Wodonga Bypass, Melbourne-Junee Passing Lanes, and Western Victoria Track Upgrade. These are significant improvements for interstate rail freight. However, due to major limitations of the NSW, Queensland and SA rail network, and the rail connections to ports and road-rail hubs, the opportunities of rail freight in Victoria cannot be realised. Improvements to all elements of the supply chain are required. 35

Transport

2.5

Delivering integrated land use and transport planning outcomes. See the challenges in the Road section.

Report Card rating Infrastructure type

Victoria 2010

Rail

Victoria 2005 C- Overall

National 2005

National 2001

C-

D-

D Freight

Based on considerations of planning, funding, and infrastructure capacity and condition, Victoria’s rail infrastructure has been rated D. This rating recognises that that there has been no fundamental improvement to the metropolitan rail network since 2005, although there are a number of projects underway that should deliver improvements. Over the long-term, a complete modernisation of metropolitan rail is required to meet the significant increase in demand expected from rising population and public transport use. While important regional rail segments have improved, quality is still below what is needed for rail freight to increase its market share. Less used elements of the regional rail network remain inadequate. The quality of the tram network is improving but is still inadequate in terms of average speed and capacity. Positives that have contributed to the rating are: Rail line upgrades including electrification, separation of freight and passenger traffic New rail lines being constructed Rail and tram vehicle fleet upgrades A renewed focus on intermodal planning that acknowledges the importance of rail A policy commitment that public transport is central to future urban development and transportoriented development in particular. Negatives that have contributed to the rating are: Severe rail congestion and inadequate service to meet the growing demand Minimal progress in removing railway crossings Minimal progress in increasing tram-road separations Inadequate air-conditioning on most rail carriages Insufficient new locomotives ordered to allow the retirement of aged locomotives Insufficient improvement in intrastate rail freight and intermodal connections Inadequate progress in providing rail lines to outer suburbs and urban fringe.

Ports

3.1

Summarry Infrastructture type

Victoria 2010 0

Vic ctoria 2005

Nationall 2005

National 2001

Porrts

C+

C+ +

This rating recognises that t while inffrastructure upgrades u havve occurred,, and port lan nd-use and strategic plans have be een develope ed, there are many signifiicant access and conges stion problem ms remaining at a and aroun nd ports. Since the la ast Report Card, C the major port secto or developme ents have be een: The com mpletion of th he major dredging works in Port Philliip Bay which h will allow la arger ships to o dock at the Port of Melbourne M The rele ease of a lon ng-term vision n for Victoria an ports in the context of an integrated supply cha ain Release e of land-use e strategies for fo all ports Remova al of econom mic regulation n at the ports s of Geelong,, Portland an nd Hastings, with the deregulation of port prices for brreak-bulk (ex xcluding moto or vehicles) lliquid bulk an nd dry bulk fo or all portss. Recently co ompleted and in-progress major infra astructure pro ojects include e: $119 million Dynon Port Rail Lin nk (completed d in July 200 09) Rehabilitation works s and crane rail r replacem ment at Swan nson Dock, w wharf rehabilitation at Webb 101 Y Dock, and deck repllacement at Yarraville Port of Geelong G Rail Access (co ompleted mid d-2009) $25 milllion extensio on of Geelong g’s Corio Quay North Wh harf for wood dchip exports s (expected to be comp pleted in Aprril 2010) Develop ping a hardw wood chip sto orage facility at the Port of o Portland Challengess to improving port infrasttructure inclu ude: Meeting g future conta ainer growth Impleme entation of th he port and freight f plans Integratting land-use e decisions with w port deve elopment.

3.2

Infrastru ucture ove erview

3.2.1

System de escription Victoria’s port p infrastruccture consistts of: Four co ommercial se eaports – the ports of Mellbourne, Gee elong, Hastin ngs and Portlland Thirteen n local ports servicing loccal industries s, tourism and recreation Shipping channels for f the ports of Melbourne e, Geelong, Hastings and d Portland.

Transport This section focuses on the four commercial seaports as they are an integral part of the State and national transport system. It does not cover local portsd or stevedoring services whose primary role is to load and unload ships. The key functions of commercial seaports are: The provision and management of basic port infrastructure such as facilities for the berthing of ships and loading cargo; navigation infrastructure, such as shipping channels, to provide for the safe access of ships to the berths; and harbour masters services, which involves directing shipping movements within the port waters. The provision of land in the vicinity of the berths on which cargoes can be assembled for loading or placed temporarily following discharge, as well as road and rail access and other services within the port environs. The provision of complementary infrastructure, such as cargo storage facilities or specialised cargo handling equipment.102 Of Victoria’s commercial ports, the Port of Melbourne is Australia’s largest international container port, while the regional commercial trading ports of Geelong, Portland and Hastings are mostly involved in moving large volumes of non-containerised bulk cargoes such as grain, fertiliser, woodchips, chemicals, petrochemicals and crude oil. Ports are key hubs in the Victorian and national transport network, and this integration is seen in Figure 3.1. Figure 3.1: Victoria’s commercial trading ports and key transport networks

103

Local ports around Victoria provide facilities and services to fishing vessels, charter boats, recreational boats and small commercial vessels. There are 13 local ports in Victoria, under management of eight local port managers. These include: • Gippsland Ports (Gippsland Lakes, Corner Inlet and Port Albert, Snowy River, Mallacoota and Andersons Inlet) • Port Phillip Bay and Western Port (public piers and jetties at Portsea, Sorrento, Rye, St Kilda, Gem Pier, Portarlington, Queenscliff and San Remo) • Port Fairy • Apollo Bay • Warrnambool • Port Campbell • Lorne and • Barwon Heads. Victorian Regional Channels Authority, Our Local Ports webpage, http://www.regionalchannels.vic.gov.au/index.php?option=com_content&task=view&id=5&Itemid=6, accessed 28 September 2009.

Ports Port of Melbourne The Port of Melbourne is managed by the Port of Melbourne Corporation (PoMC), a statutory authority of the Victorian Government. It is Australia’s largest container and general cargo port, handling around 37%104of the nation’s container trade. It handles nearly $75 billion in international and coastal trade each year.105 Non-container cargo passing through the Port includes motor vehicles, dry cargoes such as cement, grain and sugar, and liquids such as crude oil and petrochemicals. The Port of Melbourne has 34 commercial berths at five docks, river wharves, Gellibrand Pier at Williamstown and Station Pier at Port Melbourne. The berths service two purpose-built international container terminals as well as multi-purpose berths. The berths at Station Pier service the Bass Strait passenger ferry, cruise shipping and visiting naval vessels. The Port’s land covers 497 hectares along the lower reaches of the Yarra and Maribyrnong Rivers at Williamstown and at Port Melbourne. The Port is connected to other transport modes, including road and rail.106 PoMC also manages all of the shipping channels serving the Port, including the channels at the entrance to Port Phillip Bay. Private terminal operators operate the main freight facilities. Common user facilities for general cargo are operated by PoMC.107 Port of Geelong The Port of Geelong was privatised in July 1996 and is now managed by GeelongPort. The Port handles 25% of Victoria’s overseas exports, and more than 12 million tonnes of bulk cargo annually, worth around $5.6 billion.108 The Port handles a wide variety of cargoes, particularly bulk commodities such as grain, woodchips, fertiliser, petroleum and chemical products. The Port of Geelong is serviced by 17 berths, with depths up to 12.3m. The Port is connected to other transport modes such as road and rail. Trade in bulk and break-bulk trade is expected to increase by as much as 59% by 2020. Trade in liquid bulk is also expected to grow substantially.109 Port of Hastings The Port of Hastings is owned by the Port of Hastings Corporation (PoHC), which is a statutory corporation owned by the Victorian Government. The Port has a number of commercial jetties and wharves, including Stony Point jetty and depot (which also acts as access point for ferry services to French and Phillip Islands and the berth for Harbour Tugs), Crib Point liquid berths, Long Island Point liquid berth, BlueScope Steel wharves and the Esso Fractionation Plant at Long Island Point. The Port handles exports of steel, iron, ferrous alloys and LPG, and imports of petroleum products.110 Around 200 vessels visit the Port each year, carrying around five million tonnes of cargo, including petroleum, LPG and steel.111 The Victorian Government considers the Port of Hastings to be the preferred site for future container freight, once capacity at the Port of Melbourne is reached. It is planned that the Port of Hastings would supplement rather than replace Melbourne and both ports would continue to operate in parallel. Hastings has the advantages of natural deep water, large areas of vacant land and proximity to the south east of Melbourne, which is the source and destination of a significant proportion of international container flows in Victoria. However, it has the disadvantage of requiring significant infrastructure investment to make it useable for container traffic. To facilitate the development, in December 2007 the Port submitted to the Victorian Government the final draft of the Port of Hastings Land Use and Transport Strategy. This sets how future land and transport corridors will be preserved and integrated to ensure that the Port can achieve its 39

Transport vision.112 The Victorian Government has stated that it will progress preliminary planning work for expansion of the Port of Hastings, and the Victorian Transport Plan allocated $20 million for work, including environmental studies, business case development and detailed design work, so that development can proceed when required.113 The Port is expected to develop significantly over the next two and three decades, but it may be required sooner if exports of products derived from brown coal from Gippsland occur. Necessary developments will include: Construction of new berths in the Long Island Point precinct Construction of container terminal facilities to the north of the existing BlueScope facility Upgrading the broad gauge railway connecting the Port to standard guard network. Currently the Port has no infrastructure projects under way. Port of Portland The Port of Portland was privatised in July 1996 and is now owned and managed by the Port of Portland Pty Ltd. The Port handles dry, break bulk and liquid bulk cargoes. The Port’s throughput is four million tonnes of cargo annually, valued at approximately $1.5 billion. Exports include grain, woodchips, logs, aluminium ingots, mineral sands and livestock, while the major import commodities include alumina, liquid pitch and fertiliser products.114 The Port consists of six berths with depths of up to 12.2m. Deep water approaches allow for minimal pilotage.115 Over the next five to ten years, the Port of Portland is expecting to handle more than twice the amount of trade that it handles today. The majority of the growth is expected to come from forestry products in the Green Triangle Region.116

3.2.2

Policy and governance The Victorian Government’s strategic vision for ports is identified in Port Futures (August 2009). It is to develop an efficient, integrated and sustainable ports system that fits seamlessly into national transport and freight networks. Port Futures updates the Victorian Port Strategic Framework (2004). Key priorities and actions outlined in Port Futures include: Progressing development at the Port of Melbourne including considering options for new container capacity Continuing to plan for the development of the Port of Hastings Improving governance arrangements by bringing responsibility for all ports under a single portfolio, with management of Victoria’s local ports transferred to the Department of Transport from the Department of Sustainability and Environment from 1 July 2010 Improving access to Victoria’s ports including a new proposed Geelong channel improvement program Championing the ‘Green Port’ concept by incorporating world’s best practice sustainability principles into future port development.117 The Victorian Government has long recognised that the key impediment to efficient and growing ports is inadequate land-use planning and development near ports and along freight corridors linking ports with freight hubs. This recognition is reflected in the Ports Futures, which identified that long-term land planning is essential to ensure ports that can grow to meet future demand. To operationalise this, each port has developed long-term land-use plans that provide more certainty on land-use planning for the port and its surrounding areas. These plans include: Port of Melbourne Port Development Strategy, which guides port development over the next 30 years

Ports

Port of Geelong Land Use Strategy, which guides development and investment in the Port over the next 20 years Port of Hastings Port Land Use and Transport Strategy (PLUTS), which identifies port berthing areas and transport access corridors that are likely to be required due to both new trade requirements and displaced Port of Melbourne trade Port of Portland Land Use Strategy (Portland PLUS), which provides a framework for the sustainable development of the Port over the next 20 years.118

To ensure that planning documents stay current, the Victorian Government requires all commercial trading ports to prepare and regularly update their long-term strategic plans.119 As well as planning documents, the Victorian Government is likely to amend the Port Services Act 1995 enabling the Port of Melbourne to influence and participate in the development of the new Metropolitan Freight Terminal Network, notably the closer integration of the Dynon rail precinct with the Port and the establishment of a new Melbourne International Freight Terminal on the current Wholesale Fruit and Vegetable Market site.120 The Victorian Government has initiated a number of activities to integrate ports into supply chains. Examples include: Rolling out of the Melbourne Port@L initiative which aims to develop an intermodal transport hub Integration of the ports into the Victorian Principal Freight Network Consideration of port freight traffic in the East West Links Needs Assessment study Enhancing the rail port links in the Green Triangle. Port operations and development are regulated in three main areas. They are: Port economic regulation. The Port Services Act 1995 results in prices being prescribed for certain port services including the provision of channels, berthing of vessels, short-term storage or cargo marshalling, utility connections to vessels berthed in the port, and towage in the ports of Portland, Geelong and Hastings. These prices are regulated by the Essential Services Commission (ESC).e In June 2009, the Essential Services Commission released its final review of Victorian ports regulation. It recommended that the Ports of Geelong, Portland and Hastings should not be regulated, and that price regulation will be limited to port berth services for container and motor vehicle cargoes and to the shipping channel services using both the Port of Melbourne channels and the shared channels at the entrance to Port Phillip Bay.121 In December 2009, the Victorian Government agreed with the above recommendations.122 Market competition in stevedoring and freight-forwarding operations. The Australian Competition and Consumer Commission (ACCC) reviews stevedoring and freight-forwarding operations to ensure that the market remains competitive. Development of ports. Proposals for expansion of port facilities are subject to environmental assessment processes under the Environment Effects Act 1978 and the Commonwealth’s Environment Protections and Biodiversity Conservation Act 1995.123

Following a review of the regulatory framework completed in June 2004, the ESC has implemented a price-monitoring framework through the Price Monitoring Determination, available from the ESC. The key features of the framework are that: • port operators determine and publish Reference Tariff Schedules to set out standard terms and conditions for providing port services • port users and port operators may negotiate prices for regulated port services that differ from the published reference tariff • prices of regulated port services are subject to monitoring by the ESC • the ESC will publish an annual Monitoring Report to provide information to interested parties on the provision of regulated port services. http://www.esc.vic.gov.au/NR/rdonlyres/230EF294-526F-4F08-AFA7-841FF65D65BC/0/PortsBrochure2005.pdf.

Transport Key multi-jurisdictional bodies and government agencies are Department of Transport (DOT). The DOT’s Freight, Logistics and Marine Division is responsible for delivering the government’s policies in the ports and for the management of marine safety. Victorian Regional Channels Authority (VRCA). The VCRA manages the commercial navigation of the channels in Geelong port waters and oversees the channel licences for the Port of Hastings and Port of Portland. Essential Services Commission (ESC). The ESC is responsible for the economic regulation of Victoria’s four commercial seaports of Melbourne, Geelong, Portland and Hastings. Department of Sustainability and Environment. The DSE is currently responsibility for local ports but this responsibility will be transferred to DOT on 1 July 2010.

3.2.3

Sector trends Port throughput growth The throughput of all Victorian ports has increased 1% per year on average for the last four years. However, the actual growth figures vary with individual ports as seen in Table 3.1. This variation reflects the fact that port traffic is heavily dependent on the state of the economy, product demand, geographic location and seasonal variations. For instance, grain traffic, notably at the Port of Portland, is related to harvest time. Table 3.1: Cargo throughput by port (’000 mass tonnes) Year ending

2004

2005

124

2006

2007

2008

4-year

June

average change(%)

Melbourne Containers

16,800

18,370

18,552

19,744

21,092

5.9

450

593

605

677

768

14.3

9,400

9,345

8,604

9,095

8,962

-1.2

Sub-total

26,650

28,308

27,761

29,515

30,822

3.7

Geelong

9,740

10,043

9,435

9,859

9,555

-0.5

Vehicles Other

Portland

3,798

3,645

3,513

3,044

3,258

-3.8

Hastings

4,572

3,512

3,083

3,250

2,954

-10.3

44,760

45,507

43,754

45,668

46,589

1.0

Total

Table 3.2 identifies the throughput for each port. Table 3.2: Total throughput for 2007/2008 Port Melbourne

125

Import (mass

Export (mass

tonnes)

Total Throughput

Cruise vessel visits

18,763,144

12,059,097

30,822,241

Geelong

7,023,097

3,732,198

10,755,295

Hastings

1,108,966

1,733,196

2,842,162

Portland

1,301,553

1,951,193

3,252,746

28,196,760

19,475,684

47,672,444

Victorian Total

The Port of Melbourne is the only Victorian port that handles large volumes of containers. Figure 3.2 illustrates the growth in numbers of these containers which is averaging some 10% increase per annum across six years.126

Ports Figure 3.2: Quarterly Container Traffic, Port of Melbourne

127

600000

Total TEU per quarter

500000

400000 Total TEUs

300000

Linear (Total TEUs) 200000

100000

20 00 D 20 ec 01 20 Jun 01 D 20 ec 02 20 Jun 02 D 20 ec 03 J 20 un 03 D 20 ec 04 J 20 un 04 D 20 ec 05 20 Jun 05 D 20 ec 06 20 Jun 06 D 20 ec 07 Ju n

Total throughput volumes at ports are expected to increase significantly over the next 20 years. For example, by 2030 port tonnage is expected to double for the ports of Melbourne and Hastings.128 Table 3.3 and Figure 3.3 present growth forecasts for the Port of Melbourne. Table 3.3: Growth forecasts for the Port of Melbourne

129

Freight today

Freight future

Over two million twenty foot equivalent containers (TEUs)

By 2030, approximately 6.8 million TEUs will be traded

move through the Port of Melbourne annually.

through the Port of Melbourne, a 210% increase on today.

The average size of ships visiting the Port of Melbourne is

Average ship size through the Port of Melbourne in 2030

approximately 2,400 TEU.

will be over 4,500 TEU, an 88% increase.

Approximately 3,500 ships visit the Port of Melbourne per

By 2030 there are forecast to be 5,500 ship visits to the

annum.

Port of Melbourne per annum, an increase of 57%. 130

Figure 3.3: Projected containerised exports and imports for Melbourne Port

6000

5000

3000

Total TEUs (millions) Linear (Total TEUs (millions))

2000

1000

0 20 05 -0 6 20 07 -0 8 20 09 -1 0 20 11 -1 2 20 13 -1 4 20 15 -1 6 20 17 -1 8 20 19 -2 0 20 21 -2 2 20 23 -2 4

Million TEUs

4000

Transport

3.3

Performance

3.3.1

Price and quality of service Performance measures of port service quality are not comparable across ports due to differences in location, port infrastructure and the types of cargo handled.131 In addition, most port measures, such as average ship turnaround time, are likely to be influenced by the efficiency of stevedores rather than for port infrastructure. However, changes in prices provide an indication of efficiency. See Table 3.4. 132

Table 3.4: Victorian ports – estimated average increase in reference prices (%) Real price increase

2006/07

2007/08

2008/09

Port of Portland

-1.4

0.3

3.6

2.2

Port of Geelong

-0.4

6.0

0.6

VRCA

-2.3

-2.9

0.0

-0.2

Port of Hastings

10.5

3.0

15.1

19.1

6.0

1.7

9.7

22.2

Port of Melbourne

3.3.2

2005/06

Port security The ports of Melbourne, Hastings, Geelong and Portland are all Security Regulated Ports. All have security plans that aim to safeguard maritime transport and facilities against unlawful interference. The security regulatory environment is governed by the Commonwealth’s Maritime Transport and Offshore Facilities Security Act 2003 and Offshore Facilities Security Regulation 2003, which reflect the International Ship and Port Facility and Security (ISPS) Code. Over the last few years, each port has increased security measures such as participating in information-sharing forums between government agencies and regulated port users, building new and upgraded fencing and gates, restricting access to sensitive areas, undertaking background checking of port workers through the introduction of the Maritime Security Identification Card (MSIC), and increasing the volume of closed circuit television (CCTV) surveillance.

3.3.3

Environmental sustainability The Victorian Government is working with Victorian ports to develop the ‘green port’ concept. It aims to ensure that ports not only manage their short-term environmental risks, but also integrate sustainability into port development and ongoing business activities.133 Environmental factors that are key to green ports are resource consumption (e.g. water, energy, transportation) and environmental quality (e.g. emissions, water quality, land use). The importance of environmental issues is reflected in the fact that it was a key requirement to the approval and successful financial and political completion of the project. Future port developments will continue to meet increasingly strict environmental guidelines.

3.4

Future challenges The challenges in achieving improvements in port infrastructure are: Meeting future container growth. Container freight volumes are expected to grow continually for the foreseeable future. Over the short to medium term, this growth can be accommodated by on-port incremental improvements such as developing additional stevedoring capacity and infrastructure upgrades. However, over the long-term, the growth cannot be accommodated unless fundamental changes at the ports occur. This is because the congestion, delays and pollution caused by the huge traffic movements will be untenable from the exporters’ and importers’ perspectives, as well as politically. Future ports will need to be integrated into intermodal hubs/supply chains where consolidation and dispatch of containers occur, rather

Ports

3.5

than at the ports. Instead, container ports will focus on rapid loading and unloading of containers, and optimising transfers. Implementation of the port and freight plans. The Victorian Government has released several port and freight plans which are focused on improving ports as part of enhancing supply chain efficiency. The plans are Victorian Transport Plan, Freight Futures and Ports Future. The Australian Government is also developing a National Ports Strategy and this may drive developments at Victorian ports. Key projects identified to improve supply chains include: Donnybrook/Beveridge Interstate Freight Terminal, north of Melbourne, which will be the first of a new network of suburban freight terminals to take pressure off the Port of Melbourne134 Melbourne Freight Terminal network, activity centres and freight corridors High capacity rail and road transport links on the Principal Freight Network connecting the metropolitan Freight Terminals and the Port of Melbourne. These projects need to be funded and implemented to enable ports to cope with future growth in an economic, social and environmentally sustainable fashion. Integrating land-use decisions with port development. Ports require large amounts of land and generate significant road and rail traffic. Ensuring compatible land use around ports is challenging due to the typically high value of land around ports. The need to consider future port requirements when making nearby urban development decisions is recognised by the Victorian Government. However, ensuring that this occurs is challenging and requires that: Local governments consider the port’s future requirements Ports better contribute to local and regional planning Urban encroachment and other development do not prevent the efficient functioning of the port.

Report Card rating Infrastructure type

Victoria 2010

Victoria 2005

National 2005

National 2001

Ports

C+

Based on considerations of planning, funding, and infrastructure capacity and condition, Victoria’s port infrastructure has been rated C+. This rating recognises that while infrastructure upgrades have occurred, and port land-use and strategic plans have been developed, there are many significant access and congestion problems remaining at and around ports. Positives that have contributed to the rating are: Significant improvement in port land use and strategic planning Successful completion of the channel deepening project Access improvements at the ports of Melbourne, Portland and Geelong Improved planning alignment between the ports of Melbourne and Hastings. Negatives that have contributed to the rating are: Ongoing vehicle congestion problems at and around ports Inadequate truck and rail connections to the ports and intermodal centres Uncertainty about the future of break-bulk freight Insufficient development in the rail and road connections to the Port of Hastings in preparation for its long-term expansion.

Transport

Airporrts

4.1

Summarry Infrastructture type

Victoria 2010 0

Victtoria 2005

National 2 2005

National 2001

Airpo orts

Not N rated

This rating recognises the t considerable improve ement in cap pacity and qu uality of infras structure at Melbourne Airport, and the mainten nance of Melbourne Airpo ort's curfew-ffree status. In ntegration off commercia al/industrial developments d s pursued by y Melbourne,, Essendon a and Moorabb bin airports with w those deve eloped by nea arby local go overnments is unsatisfacttory as is acccess by public transport to t all airports.. The ongoing viability of smaller regio onal airportss is a concern n. Since 2005 5, the major airport a developments hav ve been: The rele ease of final Master Plans for all Com mmonwealth--leased airpo orts The gro owth in non-a aeronautical developmen d ts on Commonwealth-lea ased airports s Financia al difficulties in maintainin ng the infrastructure stan ndard at sma aller airports. Recently co ompleted and in-progress major infra astructure pro ojects include e: Road ac ccess to Esssendon airport Runway y, tarmac, terrminal, car parking and frreight upgrad des at Melbo ourne Airportt. Challengess to improving airport infrastructure in nclude: Aligning g on-airport development d t with local la and-use planss Meeting g long-term passenger p an nd freight gro owth Maintain ning the financial viabilityy of regional airports.

4.2

Infrastru ucture ove erview

4.2.1

escription System De Airport infra astructure co onsists of fixe ed assets on n airport land including runways, terminals, buildin ngs (i.e. aerona autical and non-aeronauttical industria al, commercia al and retail buildings), ro oads, drainag ge systems an nd fencing. In Victoria there t are som me 200 airpo orts and airsttrips. These can be divided into the fo ollowing categories:: Internattional and ma ajor domesticc airports – Melbourne M an nd Avalon airports Major general aviation airports – Essendon and a Moorabb bin airports Significa ant regional airports – Po ortland, Mildu ura, Hamilton n, Swan Hill, Sale, Bairns sdale, Yarrawo onga, Warrna ambool, Gee elong, Shepp parton, Alburry-Wodonga, Mt Hotham,, Ballarat and d Bendigo o 135 Minor airports and airstrips. a

Transport Table 4.1 identifies the passenger statistics for Victoria’s major airports in the last four years. Table 4.1: Passenger statistics for Victoria’s airports

136

Total Revenue Passengers Airport

2005/06

2006/07

2007/08

2008/09

21,040,864

22,156,871

23,943,342

24,448,326

154,654

167,983

170,002

155,626

Essendon

7,558

6,883

16,235

14,545

Moorabbin

8,849

8,676

9,410

12,684

13,856

10,139

11,981

11,612

Melbourne Mildura

Portland

International freight data has shrunk from 197,083 tonnes in 2005/06 to 193,197 in 2008/09.137 Domestic freight data is held by cargo terminal operators and is not generally available.138 Melbourne Airport Melbourne Airport is owned and operated by Australia Pacific Airports Melbourne (APAM). It was acquired in 1997 and operates under a 50-year lease from the Australian Government, with an option for a further 49 years. Melbourne Airport is the second busiest airport in Australia for passengers and provides the main aviation hub for the southern part of the continent. It is a key component of Victoria’s transport infrastructure and contributes to the State’s economy through tourism, airfreight and business development. Despite the global economic crisis and pandemic (H1N1) 2009 influenza (swine flu), Melbourne Airport’s 2008/2009 passenger figures grew by 2.1% as seen in Table 4.2. 139

Table 4.2: Melbourne Airport’s passenger figures

International Domestic Transit Total

2007/2008 (‘000)

2008/2009 (‘000)

4,774

4,911

% Change + 3%

19.362

19.743

+ 2%

123

119

- 4%

24,259

24,772

+ 2%

The Airport’s Master Plan (produced in 2008 and approved in 2009), stated that international passenger movements are expected to increase to between 9.3 and 12.3 million by 2027/28. Domestic passenger growth has been forecast to moderate over the next 20 years to between 34.6 million and 42.6 million in 2027/28. Total passenger movements are shown graphically in Figure 4.1.

Airports Figure 4.1: Total passenger movements at Melbourne Airport from 2000/01 to 2027/28 (millions)

140

Millions of Passenger Movements

Upper

30 Actual

Lower

0 2027/28 2026/27 2025/26 2024/25 2023/24 2022/23 2021/22 2020/21 2019/20 2018/19 2017/18 2016/17 2015/16 2014/15 2013/14 2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06 2004/05 2003/04 2002/03 2001/02 2000/01

Melbourne Airport accounts for 32% of the nation’s airfreight. It handles 350,000 tonnes of airfreight each year, placing it in the top 50 of world airports in terms of freight tonnage.141 Since 2003, Melbourne airport has made extensive investment in airfield and terminals expansion, road access, car parking, forecourt management and competitive food, beverage and retail stores. The international airport was extended for the 2006 Commonwealth Games and the runway widened and tarmacs upgraded for the A380 aeroplane. In January 2008, a $330 million, three stage project to double the size of the international terminal commenced. In 2009, a $60 million expansion was completed142 of Melbourne Airport’s car parking facilities, which provided an additional 2,300 spaces to the multi-level car park area in front of the Melbourne Airport terminal. Melbourne Airport is the first of three airports143 to have its air traffic control tower replaced under Airservices’ Stage 1 of the National Towers Program. This program involves replacing or upgrading Airservices’ 26 control towers throughout Australia. This investment is part of a Capital Expenditure Program of almost $900 million over five years and includes upgrading fire stations, communications and navigation infrastructure. Avalon Airport Avalon Airport commenced domestic passenger operations in 2004 after Linfox purchased a 100year lease of Avalon Airport from the Commonwealth Government. Today it is the 11th largest airport in the country.144 Since 2004, around three million passengers have passed through Avalon’s terminals.145 The Avalon Airport is located on a 1,800 hectare site to the south of the Princes Highway, 18km north east of Geelong. The land surrounding the airport includes the townships of Lara and Little River, grazing, sewerage treatment works, quarrying, salt production and a Department of Defence armament facility.

Transport The site is currently used as an intermodal freight hub, a domestic airport for Jetstar and other aviation services. Avalon Airport is working towards making the airport an international airfreight centre and already undertakes international airfreight movements, particularly for freight associated with major Melbourne events such as the Formula One Grand Prix. Avalon is the location for Qantas’s Boeing 747 maintenance base. As of early 2010, Avalon Airport is still in the process of applying to the Australian Government for the establishment of an international passenger terminal. The proposed development is a 7,300 m2 international passenger terminal with external areas for baggage handling facilities. The international terminal will include an entrance foyer, facilities for passenger security screening, customs, passport control, quarantine, passenger lounges, retail and cafe amenities. The proposed international passenger terminal will be located to the east of the existing domestic terminal.146 The development of Avalon Airport as Victoria’s second international gateway is a significant priority for the Government.147 In 2008, the Department of Defence rejected an application for a new international terminal at Avalon, supported by both the Victorian Government and the airport’s surrounding local government. The key challenge facing the airport is resolving the uncertainty about which planning arrangements will apply. Specifically, the Victorian Government understands that ‘that the Commonwealth may be considering regulating Avalon Airport under Commonwealth law’. However, the Victorian Government ‘understands that Avalon Airport wants more flexibility to be able to better respond to commercial opportunities as they arise and not be constrained by a Master Plan approach that is prescriptive in relation to various land uses and developments’.f Essendon Airport Essendon Airport is a general aviation and corporate jet airport situated at the intersection of the Tullamarine and Calder Freeways, 10km from Melbourne. Essendon Airport provides facilities and services for international and domestic corporate aircraft, aircraft maintenance, airfreight, aircraft charter and emergency air service providers. A curfew applies between the hours of 11pm and 6am.g In April 2009, the new $20.27 million Victorian Police Airwing and Air Ambulance Centre at Essendon Airport was opened. The facilities include a new apron, five hangars and ancillary support areas including offices, mess areas and maintenance facilities. Situated on 305 hectares, the airport has two runways, and comprises a significant mix of aviation and non-aviation activities.h 148 Essendon Airport is divided into five property developments and two aviation precincts. All commercial developments undertaken around the airport are coordinated by Essendon Fields.149 The Linfox Group and Beck Corporation acquired the lease for Essendon Airport from the Australian Government in 2001. The Commonwealth retains ownership of Essendon Airport, which

Avalon Airport’s planning controls reflect the fact that it was a defence airport in the past. When Defence force activity ceased at Avalon Airport over two years ago, consistent with other inactive Defence-owned sites in Victoria, the State planning law has been applied to the airport. Previously, the site, as Commonwealth land, was identified as not controlled by Planning Scheme (CA). The site is therefore not affected by State planning controls and use and development on the site is not subject to the planning requirements of the Planning and Environment Act 1987, including the Greater Geelong Planning Scheme. Following concerns that a retail factory outlet similar to the Essendon Direct Factory Outlet (DFO) was to be built at Avalon Airport and this was contrary to the policy objectives of Melbourne 2030, and the current CA designation of the land would not require any planning approval for the use or development of the DFO, the State Government brought the area under the Greater Geelong Planning Scheme. http://www.scca.org.au/Pdf%20links/2006PDFlinks/Avalon%20Hulls%20Advice%20June06.pdf. g Aircraft movements are not permitted at Essendon Airport between the hours of 11pm and 6am except for propeller-driven aircraft with a maximum take off weight (MTOW) not exceeding 8,618 kilograms, unless the specific aircraft or aircraft type has been included in a Prohibited Aircraft Schedule. Exceptions are also granted to propeller driven aircraft with a MTOW exceeding 8,618 kilograms that have noise emissions that do not exceed 90 EPNdB on take off and 95 EPNdB on approach. Helicopters that comply with relevant noise levels, aircraft involved in an emergency, and the police air wing are also exempt (Air Navigation Regulations 2001). h The vision of Essendon Airport Pty Ltd is ‘to establish a commercially viable, safe and functional general aviation facility which meets projected aviation requirements and opportunities whilst utilising the property’s strategic land holdings for high quality commercial development’.

Airports is leased for 50 years with a 49-year option. The lease requires Essendon Airport to continue operating the facility as an airport, and must develop the airport site at its own cost and expense, having regard to the actual and anticipated future growth in traffic demand for the airport site. There were 50,000 aircraft movements at the airport in 2008. During this decade, there has been an average decline in flight activity by approximately 5.3% per annum. The Master Plan predicts that this decline will stop and the number of flight movements will remain consistent for the future. Over the next 20 years, the average aircraft movements are expected to be within the range of 50,000 to 55,000 movements per annum.150 The approved 2008 Master Plan identified the following initiatives that may be pursued: Retention of the two-runway system The façade and internal improvement of the passenger terminal The development of general aviation and corporate jet hangars Further relocation and consolidation of aviation operations Redevelopment of existing commercial areas Improvement to road infrastructure.

The future of Essendon airport is contested. The airport owners intend to continue its aviation activities, including capitalising on the growing corporate jet market. However, the Victorian Government has stated they would like to have the airport closed in the medium term.151 The restrictions on aircraft weighti and curfew arrangements are currently preventing the airport from capturing more of the jet market. The airport’s commercial and retail development over the past few years has transformed the area into a major economic hub. However, as the development is outside local government planning control, it has resulted in large traffic volumes through residential streets, and significant traffic congestion on the Tullamarine Freeway. There is currently no public transport access into the airport.j In relocating aeronautical activities, in particular from the Bulla Precinct, aircraft have moved closer to the east side of the airport, the residential side. This has increased residential concerns of noise and health.k Regional airports Victoria has a network of regional airports that support passenger services, charter facilities and economic development by providing freight services. While some are high revenue-generating airports, such as Albury-Wodonga and Mildura, the majority make annual operating losses due to their high ongoing maintenance costs and low revenues. Unlike other States, Victoria has reasonable regional road and rail infrastructure that makes it difficult for regional airports to attract freight and passenger traffic. Increasingly, local governments are seeking State financial assistance for infrastructure upgrades.152 The Victorian Government supports airport infrastructure through the Regional Infrastructure Development Fund (Latrobe, Yarrawonga, Mallacoota and Stawell airports have received funding in the past) and the Small Towns Development Fund. In addition, the 2008 Victorian Transport Plan allocated $20 million for regional airport upgrades.153 Recent Government regional airport funding has included: i

Land aircraft above 45,000 kilograms maximum take off weight. The Airport West tram route has two stops situated near the Western perimeter of the airport along Matthews Avenue. This route provides direct access to the city and connection to the Essendon Railway Station. k The creation of a mixed-use activity centre might be supported by the Victorian Government depending on the successful resolution of issues of public transport access (such as linking to the Principal Public Transport Network), and its role in the network of Activity Centres in the region. http://www.dse.vic.gov.au/melbourne2030online/content/policies_initiatives/04c_policy43.html. j

Transport

4.2.2

Mildura airport to help facilitate Virgin to fly in and out of Mildura, aimed at expanding tourism Ballarat to help facilitate industrial land development around the airport Yarrawonga to assist in industrial developments.

Policy and governance The Victorian Government has made airports, aviation and the aviation sector a priority. This is because it recognises that they have both direct and indirect benefits. Their direct benefits include that they provide transport services that generate significant direct economic activity, employment and expert revenue, as well as enhance the quality of life. They also are becoming major centres of activities in their own right with clusters of retail, commercial and both on airport property and around them. They also facilitate indirect economic activity as direct flights are identified as a key driver of investment, trade, tourism and international education. Of particular importance is attracting international air services. This is why the government has allocated $8 million over four years to further boost its international marketing and air services attraction capacity, continues to advocate for further liberalisation of international air access, and works to make Avalon Airport Victoria’s second international airport.154 The Victorian Government has an aviation policy but this is not publicly available. As of early 2010, the Victorian Government is exploring developing a new policy and strategy. All airports are governed by the Commonwealth Air Navigation Act 1920 and the Aviation Transport Security Act 2004. Airports leased from the Commonwealth come under the Airports Act 1996. Airports owned by the Commonwealth are subject to additional Commonwealth legislation provisions, and (with the exception of Avalon) are not subject to other State legislation. On-airport planning at Commonwealth-leased airports is defined by an airport’s Master Plan. Master plans must be developed by the new airport operators within a prescribed period to cover the next twenty years and reviewed and updated at no more than five-yearly intervals. Master plans are required to be approved by the Minister for Infrastructure. Major development plans are required for certain types and scale of developments, such as runway extensions, terminal expansions and capital works over $10 million. While the use of master plans is the basis for planning considerations on airports, these stop at airport boundaries and have little, if any, influence off-airport.155 The regulations and planning policies that influence off-airport planning decisions vary depending on whether or not they are Commonwealth-leased airports, defence airports or airports that come under the State planning regimes. All airports not owned by the Commonwealth are subject to State legislation. The Victorian Government advises airport operators and local governments on the appropriate use of the Victorian planning provision overlays covering aerodrome environments. In December 2009, the Australian Government released the National Aviation Policy White Paper. This will drive an improvement in the better integrated planning at Commonwealth-leased airports by: Requiring each capital city airport to establish a Planning Coordination Forum, which will act as the vehicle to lead the ongoing discussions between the airports and the three levels of government on issues including the Master Plans, the airport’s program for proposed on-airport developments, regional planning initiatives, off-airport development approvals and significant ground transport developments that could affect the airport and its connections. Requiring airports to produce more detailed Master Plans that will have to contain:

Airports additional detail on proposed use of land in the first five years of a Master Plan, including information on planning for each non-aviation precinct, the number of jobs likely to be created, anticipated traffic flows, and the airport’s assessment of the potential impacts on the local and regional economy and community the inclusion of a ground transport plan in the Master Plan the inclusion of a more detailed analysis of how the Master Plan aligns with State, Territory and local government planning laws, as well as a justification for any inconsistencies. Requiring all airports to establish and lead Community Aviation Consultation Groups to ensure that local communities have direct input on airport planning matters, with appropriate arrangements for engagement with other industry stakeholders such as airlines and Airservices Australia where necessary. Prohibiting incompatible developments on federal airport sites, such as residential developments and schools, unless exceptional circumstances exist. Developing a number of initiatives to safeguard both airports and communities from inappropriate off-airport developments which could threaten public safety and the future viability of aviation operations. These would include working with the jurisdictions on national land use planning regimes near airports.156

Key multi-jurisdictional bodies and government agencies are: Civil Aviation Safety Authority (CASA). CASA is an independent statutory authority established in 1995 under the Civil Aviation Act 1988 to regulate aviation safety in Australia and the safety of Australian aircraft overseas. Airservices Australia. Airservices Australia is the monopoly provider of air traffic management and fire fighting services at Australia’s major civil airports. Commonwealth Department of Infrastructure, Transport, Regional Development and Local Government. The Department has a policy advisory role in aviation and provides advice to the Government on the Commonwealth’s aviation agencies’ strategic direction, their financial and operational performance, and their governance framework. The Department also has a role in leading the development and publishing of major future air traffic policy directions to give effect to the Government’s decisions, as well as leading and coordinating the implementation review processes. Australian Competition and Consumer Commission (ACCC). The ACCC is responsible for the financial and service quality monitoring at five capital city airports including Melbourne. Department of Innovation, Industry and Regional Development (DIIRD). DIIRD is responsible for the Regional Infrastructure Development Fund (RIDF) that provides funding for capital works to enhance the development of rural and regional Victoria, including funding to boost regional tourism by providing infrastructure upgrades to regional airports across Victoria.

4.2.3

Sector trends Increasing passenger movements and air freight volumes The Bureau of Infrastructure, Transport, and Regional Economics predicts that passenger movements through all airports will increase by 4% per annum over the next 20 years resulting in a doubling of passenger movements over the period. Each master plan provides forecasts of passenger demand for their airport. Melbourne Airport has sufficient terminal space to meet the predicted increasing international passenger demand until 2020.157 A new third runway is not expected to be required earlier than 2020.158 There is sufficient available land at both Melbourne and Avalon airports to grow their operations as planned. International airfreight represents 0.1% of Australia’s total physical exports in tonnes but represents 25% of physical exports by value. About 90% of airfreight is carried in the hold of passenger jets.159 53

Transport Victorian airfreight represents up to a quarter of all Australian airfreight by value.160 In 2006, Melbourne Airport exported 84,060 international tonnes of airfreight worth an estimated $3.6 billion, and imported 124,004 tonnes worth $10.4 billion. This amounts to 208,064 tonnes of international airfreight, valued in excess of $14 billion. Melbourne Airport has more than 30% of Australia’s airfreight market.161 Melbourne’s international airfreight is well balanced, with 59% of airfreight being imports, leading to greater utilisation of aircraft and the ability to minimise the risk associated with empty back loading. In addition, Melbourne Airport achieves greater utilisation levels by international aircraft (8.2 tonnes per aircraft) than other Australian airports leading to more tonnage being moved per aircraft.162 The future growth of airfreight tonnage will be directly influenced by the number of international airlines operating at Melbourne Airport and the destinations they service. It is anticipated that Melbourne’s airfreight volumes will grow in response to initiatives to gain additional international flights and destinations.163 Melbourne Airport has five dedicated airfreighter positions on its Southern Freighter Apron, ensuring significant capacity for growth in airfreight over the next decade.164 Conflicts between on-airport development and off-airport land-use planning The State Government and local government have no control over land-use planning decisions on Commonwealth-leased airports. This has led to on-airport developments that do not mesh with local development and infrastructure plans. The problem arises because the Airports Act 1996, which applies to the airports, diminishes the ability of the States and local government to ensure that airport development conforms with broader planning strategies. Specifically, the Act results in airport development plans being exempt from State planning legislation. It only requires airport owners to involve State and local governments in airport planning via seeking comments on draft master plans on a five-yearly cycle. This problem is well recognised and resulted in the undermining of the State’s land-use policy to concentrate development in activity centres, and freight and logistics precincts. An example of inappropriate development has been certain projects at Essendon and Moorabbin airports. While attracting significant numbers of customers, the Direct Factory Outlet (DFO) sites have inadequate vehicle access, car parking and public transport access, and have unsafe pedestrian access. They have also caused a loss of business in nearby areas. An example of this is the Essendon airport where its DFO draws on local catchments of surrounding activity centres at Keilor Road, Niddrie, Westfield, Airport West, Moonee Ponds and North Essendon, thereby adversely affecting the viability of businesses in these areas.165 There are examples of airport operators of Commonwealth-leased airports working to ensure that on- and off-airport developments mesh. An example of this is the new north-south connector road to be built at Moorabbin Airport. This road, entirely located upon airport land, will be open to the public and will provide an essential north-south road link between Centre Dandenong Road and Lower Dandenong Road and importantly, a south/western entry point to the airport providing improved access to terminal and operational facilities. This development was planned in consultation with Vic Roads.166 The State Government believes that the planning problems are best addressed if there is a formal integration of airport planning and development with the surrounding area’s existing planning system. Making non-aeronautical developments on airports subject to the same assessment process would not only create a level playing field between on- and off-airport uses, it would also ensure that non-aeronautical airport development will deliver a net community benefit.

Airports Major airports becoming Airport Cities A global trend is for major airports to become major business areas that integrate air facilities with business, industrial and commercial developments. This builds on the historical concept that key transport nodes (such as coastal and river ports and railway towns) have become major commercial centres. In Victoria, this is occurring at Melbourne, Essendon and Moorabbin airports. Airports are no longer just a key piece of transport infrastructure; they are becoming destinations in their own right and are becoming Airport Cities. The challenge for airports in achieving this goal includes: Simultaneously meeting both the growing demand for air passengers and freight, and the demand for other non-aeronautical functions due to commercial and retail developments Ensuring that they have sufficient on-airport infrastructure to meet demand Ensuring that there is sufficient off-airport infrastructure to allow transport to and from airports to operate efficiently Preventing or minimising inappropriate creep of residential developments towards the airport boundary which could compromise the operations of the airport Minimising noise and other environmental complaints by those living close to the airport from air, road and rail movements.

4.3

Performance

4.3.1

Aviation safety Table 4.3 provides details on air accidents and fatal accident statistics for Victoria 1999–2009. Table 4.3: Non–fatal and fatal accidents in Victoria, 1999 to 31 March 2009

167

Victoria

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Non–fatal

193

Total

Accidents Fatal accidents Fatalities

4.3.2

On-time arrivals Only two Victorian airports are monitored for punctuality and reliability by the Bureau of Infrastructure, Transport and Regional Economics (BITRE), and these are listed in Table 4.4.168 Table 4.4: On-time arrivals and departments for 2008 Airport

Percentage On-time Arrivals

169

Percentage On-time Departures

Melbourne

82.9

82.8

Mildura

76.1

85.9

To put these figures in perspective, in December 2009 Proserpine Airport recorded the highest percentage of on-time departures (95.1%), while Coffs Harbour recorded the lowest (71.1%). Proserpine Airport also recorded the highest percentage of on-time arrivals (95.1%), while Coffs Harbour Airport also recorded the lowest (73.9%).

4.3.3

Quality of service Melbourne Airport is the only Victorian airport required to report on its quality of service to the ACCC.170 Quality of service includes subjective measures such as surveys of airport users’ perceptions and objective measures such as check-in waiting times. As seen in the Figure 4.2 below, over the entire reporting period (2003–04 to 2007–08), Melbourne airport’s overall rating 55

Transport was stable at around 3.55 (satisfactory) out of 5 on average, although airside services’ overall rating decreased from 3.82 in 2005–06 to 3.51 in 2007–08. Figure 4.2: Melbourne Airport—overall quality of service ratings for international and domestic terminal services, and airside services

171

In 2007 (awarded in 2008), Melbourne Airport was named in the top five for airports that handle between 15 and 25 million passengers in the Airports Council International (ACI) Airport Service Quality Survey.172 The survey interviewed nearly 200,000 passengers across the world and is the largest review of passengers’ opinions of its kind. The survey measured overall passenger experience at each airport on 34 different parameters, including key issues such as ease of access, staff courtesy, terminal connection times and value for money. It was not a winner in 2008 (awarded in 2009).173

4.3.4

Security Following the terrorist incidents on 11 September 2001, the Australian Government introduced additional security requirements, notably through the Aviation Transport Security Act 2004 and the Aviation Transport Security Regulations 2005, at Australian airports including: Increased Australian Federal Police presence at airports 100% checked bag screening for all international flights l Screening of all domestic checked bag at major airports m Limiting liquids, aerosols and gels on international flights. While security requirements are determined by the Australian Government, airports have the ability to enhance their operational effectiveness via coordination with police, security operators, and airlines. The additional security measures, notably the requirement of 100% checked bag screening, contributed to the increase in airports’ costs during 2004–05. Costs incurred included the equipment to screen passengers and checked baggage, and the installation of overt and covert closed-circuit television security cameras.174 Future security priorities of airports will be to: Extend security along the supply chain to address the security risk of freight Expand the counter-terrorism focus of security measures to address other forms of criminal behaviour at airports.

Came into effect in 2006. New legislation, notably Aviation Transport Security Act 2004 and the Aviation Transport Security Regulations 2005.

Airports 4.3.5

Environmental sustainability Commonwealth-leased airports are required to prepare and maintain an Airport Environment Strategy (AES) which is reviewed and updated every five years. The main intent of an AES is to demonstrate to the Australian Government, key stakeholders and the surrounding community how an airport will manage environmental issues on the airport for that five-year cycle. The Act requires that an airport undertakes consultation with key stakeholders and the community prior to submission of the AES to the Government. Environmental issues on the leased airports are administered principally by Australian legislation, the Airports Act 1996, the Airport (Environment Protection) Regulations 1997 and the Airport (Building Control) Regulations 1997. The Airport Building Controller (ABC) and the Airport Environment Officer (AEO) are the on-site regulatory representatives for the Australian Department of Infrastructure, Transport, Regional Development and Local Government (DITRDLG) who administer the Act and Regulations on behalf of the Australian Government. The larger airports, by their very nature of operations, tend to produce noise and hydrocarbons from aircraft. As such, the implementation of various elements of the environment strategy is important in displaying a proactive approach to manage the impact on the environment. The AESs prepared for Melbourne, Avalon, Essendon and Moorabbin airports address the following issues and propose monitoring and mitigation strategies: Air quality Soil quality Water quality Noise emissions Waste Flora and fauna Waste management Heritage considerations. The smaller airports, including the rural and remote areas, do not normally prepare such detailed documents for their facilities. However, they have procedures in place for more immediate environmental issues such as fuel spills. Greenhouse gas mitigation Civil aviation accounts for about 2% of global emissions and this is expected to rise due to growth in the aviation sector. Ways to reduce emissions include improving aircraft fuel efficiency and air traffic management such as continuous descent approaches. A challenge for aviation sector will be the impact of the ETS. If it results in subsidies for alternative modes of travel (e.g. fuel credit for heavy on-road transport businesses), there is a risk that the exclusion of the aviation industry from comparable assistance may have the effect of creating a structural competitive distortion in the market for passenger travel and freight. Major airports are actively involved in reducing greenhouse gas emissions by enhancing building energy efficiency, working to provide increased public transport and reducing road congestion. For example, Moorabbin Airport considered Ecologically Sustainable Development (ESD) principles in their buildings, such as energy efficiency, natural ventilation, orientation, glazing shading and water harvesting.175An important driver by airport owners to reduce greenhouse gas emissions of their buildings is to position their assets as having low environmental impacts in order to attract environmentally-conscious tenants.

Transport By the end of 2009, Melbourne Airport will have identified its carbon footprint. Melbourne Airport has stated that it will continue to undertake initiatives to ensure that airport expansion achieves a 25% reduction in energy usage per square metre of managed and controlled terminal areas by 2013.176 No work has been specifically identified by Victorian airports targeted at climate change adaptation. Noise Noise concerns from airports have resulted in the imposition of curfews at Essendon airports, and restriction of land use around Avalon and Melbourne airports to ensure that they can operate curfew-free. The Victorian Government supports the continuation of both Melbourne and Avalon airports’ curfew-free status.

4.4

Future challenges The challenges in achieving improvements in airport infrastructure are: Aligning on-airport development with local land-use plans. Past development at Commonwealth-leased airports have lead to on-airport retail and commercial development that has caused significant problems for commuters, off-airport businesses and airport users. The cause of this is outside the Victorian Government's control and will require Commonwealth intervention to prevent this from occurring in the future. Meeting long-term passenger and freight growth. In the short and medium term, there is sufficient capacity at Melbourne Airport to meet expected growth. In the longer-term, an additional runway will be needed. This may require the Commonwealth to acquire land as it is a Commonwealth-leased airport. The Victorian Government has noted that ‘in the recent past the Commonwealth has declined to accept responsibility for acquiring the private properties that will be required to develop the future runway’.177 Once Melbourne Airport has reached its capacity in several decades, the development of additional airports to augment Melbourne Airport as a freight and passenger hub will be required.178 Options include expanding an existing airport, such as Avalon, or developing a new airport in greater Melbourne. Maintaining the financial viability of regional airports. Larger regional airports have the capacity to meet the slowly-growing regional passenger and freight needs. However, additional State Government support for development will be required if there are significant new nearby tourist developments or additional freight tasks. Upgrading of these airports is occurring on an as-needed basis, via RIDF.179 However, a challenge for many regional airports is funding the maintenance of ageing infrastructure. There is a growing gap between the funding need and the airport revenue. For example, the Registered Aerodromes operated by the Swan Hill Rural City Council during the period 2006-2010 have an anticipated total expenditure of $693,000 with an income of $85,000, with the difference funded by rates, reserves and loans.180 The long-term viability of smaller regional airports will depend on ongoing government financial support.

4.5

Report Card rating Infrastructure type

Victoria 2010

Victoria 2005

National 2005

National 2001

Airports

Not rated

Based on considerations of planning, funding, and infrastructure capacity and condition, Victoria’s airport infrastructure has been rated B. This rating recognises the considerable improvement in capacity and quality of infrastructure at Melbourne Airport, and the maintenance of Melbourne Airport's curfew-free status. Integration of commercial/industrial developments pursued by Melbourne, Essendon and Moorabbin airports with those developed by nearby local governments

Airports is unsatisfactory as is access by public transport to all airports. The ongoing viability of smaller regional airports is a concern. Positives that have contributed to the rating are: Upgrades at Melbourne Airport and Avalon Airport Protection of Melbourne Airport's curfew-free status Prevention of urban encroachment around Melbourne Airport. Negatives that have contributed to the rating are: Inappropriate on-airport development at Commonwealth-leased airports Financial challenges in maintaining the infrastructure at smaller regional airports Failure to advance planning for the rail link to Melbourne Airport Uncertainty about the future growth of Avalon Airport.

Transport

WA ATE ER Integra ated waterr cycle policy and practice p Victoria hass been experiencing drou ught for the last decade which w has crreated a wate er crisis in the last five yea ars. A 30% reduction r in average a rainfall, continua al decline in w water storages, ongoing drought, an nd population n growth havve forced the e Victorian Go overnment to o implement water restrictionss, conservatio on measuress and supply augmentatio on projects. h also accelerated the need to man nage all wate er resources in an integra ated mannerr. The crisis has Water reso ources consisst of water su upply (e.g. ra ainfall, inflow ws, and groun ndwater), wastewater, recycled wa ater, stormw water and to some s degree e, seawater. An integrated approach delivers d economic, social and environmenta al benefits su uch as an inccreased secu urity of supply y, savings in water and wastewater w t treatment, an nd ecologica al restoration.. It does this by using diffferent water types (e.g. recycled wa ater) for their highest valu ue use and no ot becoming reliant on on ne source. In Victoria, an integrate ed and diversse approach has been ad dopted in the e State’s wate er strategies and other planning p doccuments. It is reflected in the structure e of Victoria’ss water secto or which covers all water re esources as illustrated i in the figure be elow. The inttegration is e evident in the e role of the State’s urban and regio onal water utilities that als so include managing m watter, wastewa ater and recycled wa ater. The excception is sto ormwater wh hich is typically a shared responsibility y between lo ocal governmen nts and the utilities. u Victoria’s water w strategyy is defined in i the 2004 Victorian V Govvernment Wh hite Paper Securing S Our Water Futu ure Togetherr. This docum ment defines the State’s action a plan to o secure watter for all interests ovver the next 50 5 years. It describes d ac ctions to addrress the follo owing priority y areas: Improvin ng the frame ework for allo ocating waterr resources, recognising the needs off all water users an nd the enviro onment, and setting up a process for regional watter planning and review Restorin ng stressed rivers r and aq quifers by cre eating a lega al water entitllement for th he environme ent and imp proving the planning p and managemen nt of river hea alth Promotiing the smarrter use of irrigation waterr by separating water enttitlements an nd land ownersh hip rights and d promoting investment in i new, more e efficient irrig gation practices Encoura aging the sm marter use of urban waterr through a ra ange of invesstment and pricing p measures to increasse water con nservation an nd recycling Making the water se ector more effficient, acco ountable and innovative b by improving the institutio onal governa ance arrange ements181

Water The organisations, interrelationship and responsibilities of Victoria’s water framework. Details of the industry’s 182

organisations are discussed within each section

Advice Victorian Catchment Management Council

State Government Legislation Corporate Governance/ Accountability

Information Policy Legislation and Regulation

EL, Dividends Melbourne Water Corporation Bulk Water, Bulk Sewerage, Drainage, Floodplain & Waterway Management.

Catchment Management Authorities

EL, Dividends

Regional Catchment Strategies EL, Dividends

Drainage and Stormwater

Bulkwater

$ Local Government

$ & Bulk sewerage / wastewater

Bulk Water Regional Urban Water Authorities

Retail Water Companies $& Wastewater

Rural Water Authorities $

$& Wastewater

Customers Commercial and Residential

Metropolitan Melbourne

Regional Urban Sector

Water & Drainage

Customers Irrigators, Stock & Domestic, Stream & Groundwater Diverters Rural Sector Regional Victoria

In 2007, an update was produced called Our Water Our Future – The Next Stage of the Government’s Water Plan. Known as the Victorian Water Plan, it was produced in response to unprecedented low inflows into water storages in 2006, increased demand due to higher than expected growth in the population and economy, and projected climate change future impacts. The $4.9 billion plan identified the need for urgent, large-scale supply-side augmentations for the Melbourne water supply system. Key initiatives are to: Build a desalination plant in the Wonthaggi region Save water through upgrading irrigation channels in the Food Bowl region of Northern Victoria Expand the Water Grid to pipe water around the State, including the new Sugarloaf Pipeline connecting Melbourne to the Goulburn River Extend water conservation and recycling programs, including upgrading the Eastern Treatment Plant.183 Of all the measures to address Victoria’s water crisis, the most significant is the construction of the desalination plant. The plant should enable water reservoirs to refill and allow for water restrictions to be removed over the next few years, possibly to be totally removed around 2012.184 If no further major policy changes are made, the growing population and economy will eventually result in demand exceeding supply. Following the current suite of augmentation, water storage levels are again forecast to drop to a level requiring Stage 1 water restrictions to be introduced by 2036.185

Water The table below lists Victoria’s other key water policies and documents. Victorian Government water policies and strategies Policies and

Description

strategies Sustainable water

Fifty year sustainable water strategies are required to be produced by each of Victoria’s four

strategies

water regions. These set out a long-term regional plan to secure water for local growth while maintaining the balance of the area’s water system and safeguarding the future of its rivers and other natural water sources. The regions are: • Northern Region (the River Murray system and its tributaries – Kiewa, Ovens, Broken, Goulburn, Campaspe and Loddon systems). Final Strategy released in 2010 • Central Region (West Gippsland, Port Phillip, Westernport, Western, Central Highlands and Barwon Regions). Final Strategy released in 2006 • Western Region (Wimmera, Mallee, Millicent, Portland, Otway, Glenelg, Hopkins and Avoca Basins). The Draft Strategy is expected to be released in 2010 • Gippsland Region (South Gippsland, Latrobe, Thomson, Mitchell, Tambo, Snowy and East Gippsland Basins). The Draft Strategy is expected to be released in 2010.

Water supply and

Water organisations are responsible for developing 50-year water supply and demand

demand strategies

strategies. These identified the likely impact of a number of climate change scenarios on the future security of supply, and the actions to ensure ongoing security of supply, including preliminary water conservation targets. The water supply and demand strategies provide input to the sustainable water strategies.

Five-year water plans

186

Water organisations must each develop a water plan that complies with the requirements set out in the Statements of Obligations issued by the Minister for Water to each water organisations. The water plan must describe how the organisation will deliver on service standards across a five-year period, the revenue needed to do this, and the prices proposed to generate this revenue. The Essential Services Commission (ESC) reviews these plans and must agree with the proposed prices before the plans are finalised.

187

While Victoria is ultimately responsible for decisions about water policy, its decisions are bound by the fact that it is a signatory to the National Water Initiative (NWI). The NWI is an agreement signed by all Australian States and Territories at the 2004 meeting of the Council of Australian Governments (COAG). The NWI aims to provide a long-term, national plan for water reform. It has the objective of increasing the productivity and efficiency of water use and the health of river and groundwater systems in Australia by building a nationally-compatible market, regulatory and planning-based system of managing surface and groundwater resources for rural and urban use that optimise economic, social and environmental outcomes.n By signing it, the Victorian Government has agreed to: Prepare water plans with provision for the environment Deal with over-allocated or stressed water systems Introduce registers of water rights and standards for water accounting Expand the trade in water Improve pricing for water storage and delivery 188 Meet and manage urban water demands. With the passage of the new Murray-Darling Basin legislation by all Basin jurisdictions in late 2008, the Intergovernmental Agreement on Water Reform in the Murray-Darling Basin has come into effect. However, there is still significant work to be done by Basin jurisdictions to implement governance and market reforms that will result in sustainable water use for the Basin. In June 2009, the Australian and Victorian Governments reached agreement that will enable the Australian Government to acquire 300GL over the next five years from 2008/09, over and above those purchases already permitted under Victoria’s 4% annual cap from irrigation districts. Under the n

The Intergovernmental Agreement on a National Water Initiative was signed at the 25 June 2004 Council of Australian Governments meeting. The Tasmanian Government joined the Agreement in June 2005 and the Western Australia Government joined in April 2006. National Water Commission, National Water Initiative, webpage, http://www.nwc.gov.au/www/html/117-national-water-initiative.asp, accessed 1 November 2009.

Water agreement, and subject to a review of progress on the Northern Victoria Irrigation Renewal Project, Victoria will begin to phase out the 4% cap on permanent water trades from irrigation districts from July 2011, with a view to removing the cap entirely by 2014.189 Decisions on water are also bound by the existing uses of water. In a typical year, Victoria receives about 150,000GL as rainfall. Most of this is either taken up by plants or evaporates; only 16% (23,000GL) flows into streams and 1% filters through to recharge groundwater aquifers.190 Of the water that enters the rivers, 27% is extracted for consumptive use. Some 77% of this extracted water is used for irrigation, 4% for domestic and livestock purposes on rural properties, 10% for Melbourneâ&#x20AC;&#x2122;s residents and businesses and 9% for regional towns and businesses.191 Some 3% of water is used by brown coal power generators in the Latrobe Valley.192 These shares are identified in the figure below. Water use in Victoria

193

Case study: Wimmera-Mallee Pipeline A major Victorian water project is the Wimmera-Mallee Pipeline. Its aim is to save around 100GL/year by building almost 9,000 kilometres of reticulated pipeline to replace 17,800 kilometres of open channels. The existing channels lose, due to seepage and evaporation, more than 80% of the water that enters them. The project will supply stock and domestic water to 7,000 rural customers and 36 towns across a region that covers almost 10% of Victoria, from the Grampians to the Murray River.194 The project is a partnership between the Victorian Government, the Australian Government and Grampians Wimmera-Mallee Water Corporation, on behalf of the regional community. The Victorian Government is contributing $266 million to the project. The pipeline will be completed in early 2010.195

Potablle waterr

5.1

Summarry Infrastructture type

Victoria 2010 0

Potable water

Victtoria 2005

National 2 2005

National 2001

B Metropolitan

B-

n-metropolitan B- Non

This rating recognises that t Victoria’s water supp ply has been directly impacted by the e significant decline in rainfall of the desalination plant will futurer and growing g popu ulation. The construction c proof Melbo ourne’s wate er supply for the next dec cade, althoug gh at high en nergy and financial costs.. This plant may m not have e been need ded had other sources of water supplyy been pursu ued seriouslyy since the 1990s. Planning is still no ot evident to achieve a majo or changes in n water supp ply and use, which means that addittional desalin nation plants may be nee eded due to p population grrowth and climate cha ange. Ensuring water susstainability will w also be a challenge c in a number off regional areas. Since the la ast Report Card, C the major potable water w sector development d ts have been n: The ong going water restrictions r a focus on water conse and ervation Reduction in water used u by indu ustry Very low w water levels in water re eservoirs A signifiicant increas se in water augmentation n projects A signifiicant increas se in the costt of water forr consumers.. Recently co ompleted and in-progress major infra astructure pro ojects include e: Comple etion of the Goldfields G Superpipe Constru uction of the $750 $ million Sugarloaf in nterconnector which can provide 75GL per year1966 Constru uction of the $3.5 $ billion desalination d plant p which can c provide 1 150GL per year197 Reconn nection of the e Tarago Resservoir to Me elbourne’s wa ater supply n network whic ch can provid de 198 15GL/ye ear, and costed at $97 million. m Challengess to improving potable wa ater infrastructure include e: Guaranteeing the lo ong-term supply of potable water Increasing the water supply to th he level at wh hich water re estrictions ca an be remove ed Understtanding and managing climate chang ge impacts on n water Understtanding and managing Victoria’s aquiifer resource es.

5.2

Infrastru ucture ove erview

5.2.1

escription System de Victoria’s potable p waterr infrastructure comprises s: Storage e reservoirs and a waterways Treatme ent facilities Transfer pipelines Reticula ated water ne etwork.

Water Victoria’s water organisations provide potable water services to customers within their service areas. The organisations can be divided into metropolitan and regional/rural water supply organisations. Metropolitan water is provided by Melbourne Water and retail water businesses. Melbourne Water manages the supply catchments, reservoirs and the major distribution system for metropolitan Melbourne and is responsible for the harvesting, treatment and transfer of water to the three Melbourne retail water businesses.o There are three retail water businesses, City West Water, South East Water and Yarra Valley Water. These three businesses provide water reticulation and sewerage services and range in size from City West Water which operates over 580km2 and serves approximately 700,000 people, to Yarra Valley Water which operates over 4,000km2 and serves over 1.5 million people.199 Melbourne’s water supply comprises nine reservoirs and has a total storage capacity of 1,773GL (see Figure 5.1). The largest reservoir is the Thomson Reservoir, which holds almost 60% (1,068GL) of the total system storage capacity. Water is moved between reservoirs, mostly east to west through the use of gravity. About 75% of Melbourne water has passed through either Silvan Reservoir or Cardinia Reservoir.200 Figure 5.1: Melbourne’s Water Supply System

201

Since October 2006, bulk entitlements to the water resources within the system have been held by the three metropolitan retail water authorities, City West Water, South East Water and Yarra Valley Water. An entitlement for the environment is also held by the Minister for the Environment on behalf of the State. Thus, although Melbourne Water owns the infrastructure by which supplies are made available, such as the reservoirs and transfer mains, the retail water authorities hold entitlement to the water itself. This entitlement has been defined by way of a ‘pooled’ arrangement, such that no individual retailer has title to or the ability to manage its allocation of water independently of its two peers. Management of the single pooled entitlement is overseen by a Bulk Entitlement Management Committee which comprises the three retail water authorities and Melbourne Water. Melbourne Water operates and manages the system on behalf of the metropolitan retail water authorities in accordance with a series of high-level principles and strategic rules that have been approved by the retail water authorities. Melbourne Water prepares an Annual Operating Plan each year in accordance with these rules, which outlines how water and sewerage services will be provided in accordance with demands of the retail water authorities for the coming year and how environmental flow requirements will be met. This Plan is subject to the endorsement of the Bulk Entitlement Management Committee. Melbourne Water is party to a Bulk Water Supply Agreement with each of the three retail water authorities, which define these and other responsibilities on identical terms. Melbourne Water also has similar agreements by which it can supply lesser amounts of water to regional water corporations, namely Western Water, Gippsland Water and Southern Rural Water. These water corporations, along with the Department of Sustainability and Environment, act as observers on the Bulk Entitlement Management Committee. Augmentation of the Melbourne Water Supply System, p. 3.

Potable water Melbourne’s water businesses and their characteristics are listed in Table 5.1. Table 5.1: Metropolitan water businesses’ potable water characteristics Water customers City West

202

Length of water main (km)

336,947

4,217

South East

625,862

8,585

Yarra Valley

660,263

9,088

Not applicable

1,232

Melbourne Water

Victoria has 16 regional and rural water supply businesses that provide non-metropolitan urban and/or rural services. These businesses consist of: Eleven water businesses providing urban water and wastewater services to regional towns Three water businesses providing rural services, including management of headworks and/or bulk supplies to regional towns and farms Three water businesses providing combined rural and urban water services, including the management of headworks, rural and regional town water and wastewater services203 Regional urban water businesses and their characteristics are listed in Table 5.2. Table 5.2: Regional urban water businesses’ characteristics

204

Water customers Barwon

Length of water main (km)

130,550

3,472

58,371

2,194

Coliban

65,223

2,135

East Gippsland

20,332

877

Gippsland

59,822

2,009

Goulburn Valley

52,033

1,694

GWMWater

30,564

1,243

Lower Murray

30,162

894

North East

43,705

1,520

South Gippsland

17,481

626

Wannon

40,157

1,755

Western

47,959

1,690

Westernport

14,305

374

Central Highlands

Types of new water supply Potable water can be provided from a number of different sources and approaches, and these can be categorised in three main ways. Major augmentation versus micro-solutions: Investments can be focused on a few largescale investments, such as desalination plants, or on numerous small-scale investments, such as household rainwater tanks. Rainfall-dependent versus manufactured water supplies: Most water is derived from rainfalldependent sources such as reservoirs and rivers, whereas manufactured water supplies, such as desalination, have little or no reliance on rainfall. Potable supplies and non-potable supplies: Potable water is used for drinking while nonpotable cannot be used for drinking but can be used as a substitute for uses that do not need the potable quality level, such as watering gardens or industrial processes, thus freeing up potable water for higher value uses such as washing and cooking.205 Each has its advantage and disadvantage, many of which vary with location and situation. Figure 5.2 provides a rough comparison of the costs of different supply and demand options available to Australian cities. 67

Wa ater Figure e 5.2: Direct co osts of different water supply y and demand options o

206

$10.0 00

$/kL

$8.0 00 $6.0 00 $4.0 00 $2.0 00 $0.0 00

5.2 2.2

Polic cy and governance The Victorian V Govvernment's strategic s visio on for water is to provide for current a and future wa ater uses 207 in a way w that coulld be sustain ned without damaging d the e environmen nt. The Vicctorian Gove ernment ownss all Victorian n water busin nesses and has h stated that these bussinesses will remain in pu ublic owne ership.p Key legislation tha at governs water w businessses are: Water W Act 198 89 that establishes Melbo ourne Water and the 15 regional wate er corporation ns Co orporations Act A 2001/Wa ater Industry Act 1994. Th he three mettropolitan wa ater retailers are a state-owned companies c esstablished un nder the Corp rporations Acct 2001 that a are holders of o water er Industry Act 1994 liccences issued under the Water Indusstry Act 1994 (the retailerss). The Wate esstablishes the e frameworkk under which h the three Melbourne M wa ater retailers are licensed d and re egulated by th he Essential Services Co ommission, to ogether with the statutoryy functions, powers p an nd obligations of the licen nsees Ca atchment an nd Land Prote ection Act 19 994 Sa afe Drinking Water Act 2003. This Acct provides a risk manage ement framew work from ‘ca atchment to tap’ with standards for water w quality criteria, c information disclo osure require ements an nd auditing of o performancce. It is administered by the t Department of Huma an Services The Victorian V Govvernment ha as indicated that t it will be reforming water w sector g governance in the near term. This in ncludes: Brringing the metropolitan m r retail water companies c un nder the Water Act 1989 En nabling inclusion of broad der amendm ments arising from the Vicctorian Comp petition and Efficiency E Co ommission’s 2008 review w of the retail sector208 an nd other currrent and eme erging issues s Sttreamlining and a clarifying g processes underpinning u g the significa ant water refforms made since 20 006209 Key multi-jurisdict m tional bodiess and govern nment agencies are: Na ational Wate er Commiss sion (NWC): The NWC is s responsible e for driving p progress tow wards the su ustainable management and a use of Australia’s A wa ater resource es under its b blueprint for water w re eform, the Na ational Waterr Initiative. Th he Commiss sion advises the t Council o of Australian Go overnments (COAG) and d the Australian Governm ment on natio onal water isssues and the e prrogress of the e National Water W Initiative.

To o increase the prospect p that Vicctoria’s water bu usinesses rema ain publicly owne ed, the State Co onstitution was amended in 2003. The Con nstitution (Wate er Authorities) Act 2003 amende ed the Constituttion Act 1975.

Potable water

5.2.3

Essential Services Commission (ESC): The ESC, under the Water Industry Act 1994 and Water Industry Regulatory Order 2003 is the independent economic regulator of the Victorian water businesses. Its primary objective is to ‘protect the long term interests of Victorian consumers with regard to the price, quality and reliability of essential services’. Department of Human Services (DHS): DHS monitors water quality under the Safe Drinking Water Act 2003. Department of Sustainability and Environment (DSE): The DSE has two key sets of responsibilities for water. The first is for the management of water resources, and is responsible to the Minister for Water in providing advice on water policy, strategic, whole-of-state and regional water planning, and the performance of these water organisations in discharging their obligations. The second is for the framework for the integrated management and protection of catchments feeding rivers, streams and water storages and is responsible to the Minister for Environment and Climate Change in providing advice on planning for the management of these catchments, the use of environmental entitlements where a volume of water is legally allocated to the Minister to safeguard the health of the environment, and the performance of the Catchment Management Authorities (CMAs) responsible for formulating regional plans to protect and sustain water resources, and the performance of the CMAs in discharging their obligations.210 Energy and Water Ombudsman Victoria (EWOV): The Ombudsman deals with water organisations’ customer complaints.211

Sector trends Low water storage levels Victoria’s water storage levels have decreased almost continuously over the last decade. The last time that Melbourne’s water storages were full was in 1996. In June 2009, they reached a decade low of 28.4% before the spring rains increased it to over 36.7%.212 Figure 5.3 shows the declining water storage levels over the last decade. In January 2010, regional water storages were at 36.7% of capacity.213 Figure 5. 3: Melbourne’s water storage levels

214

Water The low storage levels are mainly due to a reduction of inflows and rainfall. While rainfall varies each year, since the early 1990s there has been a 30% decline in inflows. The change is illustrated in Figure 5.4. Over the period 1913 to 1997, inflows averaged 608GL/year and between 1998 and 2009, it averaged just 387GL/year. Figure 5.4: Water flowing into Melbourne’s main water supply reservoirs (annual totals)

215

Over the longer term, climate change is expected to reduce average rainfall. Climate change impacts on inflows Climate change is predicted to significantly worsen the water availability in Victoria due to changes in rainfall and evaporation rates. The CSIRO and the Australian Bureau of Meteorology have developed the following projections. The annual average rainfall is expected to decrease by around 4% by 2030; however, the full range of model uncertainty ranges from -9% to +1% The greatest decreases in rainfall are likely to occur in winter and spring, while heavy rainfall intensity is most likely to increase in summer and autumn By 2070, annual average rainfall is likely to decrease by 6% (-14% to +2%) under a lower emissions growth scenario or by 11% (-25% to +3%) under a higher emissions growth scenario.216 See the Overview chapter for information on climate change uncertainties. Figure 5.5 shows annual average and seasonal rainfall projections for 2070 under the low and high greenhouse gas emissions scenarios.

Potable water Figure 5.5: Annual average and seasonal rainfall change projections for 2070 under the lower and higher emissions growth scenarios

217

Climate change, a prime driver of increased evaporation rates, will increase average temperatures across the State. The CSIRO and the Australian Bureau of Meteorology note that: Â? By 2030, catchments located in the north east and south east may experience up to 30% reductions in runoff, those in the north west can expect decreases ranging from 5% to 45% while the southwest can expect 5% to 40% Â? By 2070, runoff into catchments in East Gippsland may increase by 20% or decrease by 50% depending on changes in rainfall; the remainder of the state can expect declines of at least 5% or up to 50%.218 Figure 5.6 displays the projected changes in average annual runoff by 2030 and 2070. Figure 5.6: Projected changes in average annual runoff by 2030 and 2070

219

Water

Ongoing conservation, demand management and restrictions Reducing water consumption has been a key strategy of the Victorian Government to enhance water security. The reduction in demand has been achieved by: Water restrictions Water reduction campaigns, e.g. The target 155 program which aims to keep water consumption to 155 litres per person per day Water pricing to encourage saving water Water conservation measures such as subsidies for water-efficient products Industry-specific programs, e.g. the pathways to sustainability program, involving Melbourne’s water retailers working with around 1500 major industrial water users to develop water-saving plans that will reduce industrial water use by 5GL annually. The Victorian Government’s water consumption targets are set out in Figure 5.7. Figure 5.7: Per capita water consumption in Melbourne

220

2020 Target 2015 Target 2005-2006 90s Average 0

100

150

200

250

300

350

400

450

Consumption (litres per person per day)

Water restrictions have been in place since 2002. Water restrictions are defined in Drought Response Plans that are developed by water organisations in accordance with DSE guidelines and applied in their areas of responsibility. Restrictions are divided into four stages and increase in severity as the volume of water held in storages falls below certain levels. Melbourne was on Stage 1 restrictions in 2002, and these were increased to Stage 2 in August 2003. These remained in place until March 2005 when Permanent Water Savings Rules were introduced. The current Melbourne metropolitan Drought Response Plan was introduced in 2006 and established four new stages. In November 2009, Melbourne was on Stage 3a restrictions. This level achieves the bulk of expected savings under Stage 4 restrictions but the impact on businesses affected by water restrictions is minimised to protect jobs and provide some relief for important community activities such as the watering of sports ovals.221 Table 5.3 identifies the restrictions in the Melbourne metropolitan area.222 Table 5.3: Influence of water restrictions on system demand Level of restrictions

Most recent introduction

223

Expected reduction in unrestricted demand

Stage 1 Restrictions

1 September 2006

Stage 2 Restrictions

1 November 2006

Stage 3 Restrictions

1 January 2007

2.5% 8.0% Not relevant as modified to Stage 3a

Stage 3a Restrictions

1 April 2007

12.5%

Stage 4 Restrictions

Not declared

17.5%

Potable water The future per capita water consumption is expected to increase as illustrated in Table 5.4. 224

Table 5.4: Residential potable water use targets, litres per capita per day Measure

2009/10

City West Water

2010/11

2011/12

2012/13

165

171

174

170

South East Water

155

163

169

168

Yarra Valley Water

155

164

161

164

Victoria’s towns are on various water restrictions depending on their local circumstances. In August 2009, 332 Victorian towns were on restrictions. Of these, 81 were on Stage 1 restrictions, 31 were on Stage 2, 54 were on Stage 3, 19 on Stage 3a, 105 on Stage 4 with general exemptions, and 42 on Stage 4. Approximately 190 towns were not on water restrictions but were subject to Permanent Water Saving Rules.225 Melbourne’s ongoing supply augmentation and diversity The unprecedented drought and water restrictions across the State have driven major investments in a range of projects. The two key strategies being pursued by the Victoria Government are augmenting supply, and increasing water supply diversity rather than being totally dependent on rainfall and runoff. The major projects under the Victorian Water Plan to address this are illustrated in Figure 5.8. Together they will produce 240GL/year of new water. Figure 5.8: Next stage commitments

226

150 GL Desalination

Annual volume of water supply to Melbourne (GL)

700

600

500

75 GL Sugarloaf Interconnector

240 GL New w ater for consumption and to rebuild storages

12 GL Tarago reconnection

400

300

200

100

0 Average supply for dams for last 10 years

2009

2010

2011

The Tarago reconnection involved reconnecting the reservoir to Melbourne’s water supply network. In 1994, Melbourne Water had stopped using untreated water from the Tarago Reservoir due to its poor quality. In June 2009, a new $97 million water treatment plant was opened allowing 15GL/year of water to be supplied.227 The Sugarloaf Interconnectorq will transfer water from the Goulburn River to the Sugarloaf Reservoir, which supplies water into Melbourne’s water distribution system. The 70km pipeline can transfer up to 100GL/yr from the Goulburn River, but on average it is expected to transfer 75GL/yr. q

Also known as the North-South Pipeline.

Water It is planned that water will be sourced from water savings achieved through the modernisation of irrigation infrastructure in the Goulburn-Murray Irrigation District. This $750 million project was approved in 2007 as a rapid response to Melbourne’s water shortages because it was the only augmentation option that could deliver significant new water to Melbourne within three years.228 Other interconnectors under development that will enhance the State’s water grid are the HamiltonGrampians Interconnector and the Melbourne-Geelong Interconnector. The desalination plant is currently being constructed at Wonthaggi and is expected to be operational in late 2011.229 It will produce 150GL annually of potable water, about one third of Melbourne’s water demand. It will take water from Bass Strait, process it and pump the potable water via a new 85km pipe to Melbourne’s water supply system near Cardinia Reservoir. The plant will require around 90MW of electricity that will be offset by the purchase of renewable energy. The desalination process is illustrated in Figure 5.9. Figure 5.9: Desalination using reverse osmosis

230

A regionally significant augmentation project was the Goldfields Superpipe. The Superpipe increased water supply to the Ballarat and Bendigo regions. It has two sections, the 46.km, $98 million Bendigo (Coliban Water) leg and the 87km, $180 million Ballarat leg. The Victorian Government contributed $101 million to the project and the Australian Government contributed $115 million. The remainder was funded by Central Highlands Water and Coliban Water. Construction began in February 2007 and was completed in May 2008.231

5.3

Performance Key parameters to assess infrastructure performance are the levels of core services, financial indicators (notably capital and maintenance expenditure), and environmental indicators. For metropolitan water businesses, Table 5.5 shows the performance for the three years ending 30 June 2008, and proposed targets for the next regulatory period (2009/10-2012/13). The reason that there is no significant change over the current regulatory period is because the ESC’s approach uses the average of the last three years’ performance to set the performance target of the next period.

Potable water Table 5.5: Core urban service standards

232

City West Water

Yarra Valley Water

2005/6-

2009/10-

2005/6-

2009/10-

2005/6-

2009/10-

08/09

12/13

08/09

12/13

08/09

12/13

(actual) Number of unplanned water supply

South East Water

(actual)

60.3

29.6

31.2

63.1

24.3

37.2

34.2

110.5

120

233.8

945.8

550

357.5

86.1

99.7

99.6

99.5

93.3

78.5

99.6

47.6

17.2

17.6

24.9

7.8

7.7

12.2

0.31

0.20

0.21

0.28

0.06

0.04

0.09

175.5

87.8

88.8

137.2

205.6

140.6

141

139

209

416

9.2

9.5

13.6

interruptions (per 100 kilometres) Average time taken to attend bursts and leaks Priority 1 (minutes) Average time taken to attend bursts and leaks Priority 2 (minutes) Average time taken to attend bursts and leaks Priority 3 (minutes) Unplanned water supply interruptions restored within five hours (%) Planned water supply interruptions restored within five hours (%) Average unplanned customer minutes off water supply (minutes) Average planned customer minutes off water supply (minutes) Average frequency of unplanned water supply interruptions (number) Average frequency of planned water supply interruptions (number) Average duration of unplanned water supply interruptions (minutes) Average duration of planned water supply interruptions (minutes) Customers experiencing more than five unplanned water supply interruptions in the year (number) Unaccounted-for water (%)

One measure of overall reliability of a water supply network is Customer minutes off supply, the product of average customer interruption frequency and average interruption duration. Statistics for the year 2007/08 identified that the average customer minutes off supply for water supply interruptions averaged 34 minutes across all suppliers, with a range of eight minutes for North East Water to 200 minutes reported by Westernport Water. The average was no different from 2006/07.233 The Customer minutes off supply for each water business over three years is identified in Figure 5.10.

Water Figure 5.10: Average customer minutes off supply

234

The asset condition of water systems is reflected in the numbers of bursts per 100km of pipes. In 2007/08, the average rate of bursts and leaks was 44 per 100km of water main compared with 51 per 100 kilometres of water main in 2006/07. The performance ranged from 11 to 69 per 100 kilometres. Twelve businesses reported a decrease in the number of bursts and leaks from 2006/07 with the largest decreases reported by Gippsland Water (34% decrease) and Goulburn Valley Water (31% decrease). South Gippsland Water, followed by City West Water and Yarra Valley Water reported the highest number of bursts. Drought conditions of drying soil, reactive clay soils, expansion and contraction and the age of the reticulation pipelines were reasons attributed to pipe failures.235 Figure 5.11 illustrates the bursts and leaks per 100km of water main for Victorian water businesses. Figure 5.11: Bursts and leaks per 100km of water main

236

Capital and maintenance expenditure is expected to rise significantly over the next few years. This is due to many potable water projects identified in the Victorian Water Plan in addition to ongoing water security initiatives. Table 5.6 details the past and future capital expenditure by Melbourne water businesses. The figures combine potable water, sewage, recycled water and stormwater projects.

Potable water Table 5.6: Actual and forecast capital expenditure (2005/06 to 2012/13) proposed by businesses (million in January 2009 prices)

237

2005/

2006/

2007/

2008/

2009/

2010/

2011/

2012/

Total

2008/ 13

City West Water

70.8

68.9

76.0

90.4

161.3

175.4

104.7

63.4

504.7

South East Water

65.1

93.1

103.1

123.5

181.2

173.4

142.4

137.5

634.6

Yarra Valley Water

169.8

178.6

164.4

234.5

296.8

277.9

233.0

242.4

1050.2

Melbourne Water

154.1

201.9

368.5

1016.1

946.5

580.6

287.6

97.1

1911.8

All businesses

459.8

542.6

712.1

1464.4

1585.9

1207.3

767.8

540.5

4101.4

The increase is being funded by a significant increase in water rates. In 2008, the ESC made its final decision on price increases for 16 Victorian rural and urban water businesses. It determined that it would increase average real price increases to between 0.9 and 14.9% each year over the next five years.238 239 The key performance measure for microbiological water quality is the bacteria count of Escherichia coli (E. coli). The presence of E. coli means that water may be contaminated with faecal material. Ideally, 98% of samples of drinking water should be free of the presence of E. coli. During 2007/08, almost all customers received drinking water that met E. coli requirements, with the exception being North East Water (98.5%).r See Figure 5.12 for details. Figure 5.12: Microbiological water quality (% of customers receiving drinking water meeting E. coli requirements)

5.3.1

240

Environmental sustainability Water businesses are actively promoting the sustainable use of water in programs such as the showerhead replacement scheme. In terms of climate change, they are reducing their carbon footprint as well as implementing adaptation measures to make them more resilient to weather extremes and bushfires. Desalination water is currently generating 6.52kg of carbon dioxide per cubic metre of water, and as a carbon cap and trade system enters the Australian economy, the cost of desalinated water is likely to increase by 80%.241

The Victorian Government capped metropolitan water price increases at 14.8% for the one-year period 2008/09 while the VCEC undertook its review of Melbourneâ&#x20AC;&#x2122;s retail water sector, Water Ways: Inquiry into Reform of the Metropolitan Retail Water Sector. The Government announced that the average Melbourne water bill was likely to double (in real terms) by 2012, Essential Services Commission, 2009, Water Performance Report â&#x20AC;&#x201C; Performance of Urban Water and Sewerage Businesses 2007-08, pp. 74-75.

Water

The water businesses are actively reducing the non-revenue water in their system using programs such as leak detection. Almost all Victorian water businesses reported reduced non-revenue water in 2007/08.

5.4

Future challenges The challenges in achieving improvements in potable water infrastructure are: Guaranteeing the long-term supply of potable water: While the water restrictions and supply augmentation since the mid-2000s have averted a major water shortage that could have occurred around 2010 if additional water for Melbourne not been obtained,s the challenge of providing a sustainable water supply still remains. Desalinisation of water is very expensive and over the long-term imposes an enormous cost burden on Victoria, particularly if a second plant is built. Cheaper sources, notably using recycled water for indirect potable use, may be far superior in economic and environmental terms. Increasing the water supply to the level that water restrictions can be removed: By 2011 when the desalination plant commences operation, the volume of water available will increase significantly; the plant will meet about one third of Melbourne’s water usage. This new water will reduce the demand on water reservoirs allowing them to replenish. However, given the above trends, these storages may not ever return to 100% capacity. Our Water Our Future – The Next Stage of the Government’s Water Plan stated that the new water supply will allow water restrictions to be progressively removed from 2010 with Stage 1 or no restrictions by 2013.242 Achieving this was partly predicated on the substitution of recycled water for potable water. However, as this substitution will be far less than expected, the speed of removal of the water restrictions is in doubt. Understanding and managing climate change impacts on water: Climate change is creating significant risks to potable water supply, notably through lower rainfall and runoff, and increased frequency of droughts and bushfires. Managing these risks requires a better understanding of them as well as changing water use and increasing supply diversity. Understanding and managing Victoria’s aquifer resources: Water in aquifers can be a significant source of water. However, they need to be controlled to ensure that they are not over exploited nor polluted.

5.5

Report Card rating Infrastructure type

Victoria 2010

Potable water

Victoria 2005

National 2005

National 2001

B Metropolitan

B-

B- Non-metropolitan

Based on considerations of planning, funding, and infrastructure capacity and condition, Victoria’s potable water infrastructure has been rated C. This rating recognises that Victoria’s water supply has been directly impacted by the significant decline in rainfall and growing population. The construction of the desalination plant will future-proof Melbourne’s water supply for the next decade, although at high energy and financial costs. This plant may not have been needed had other sources of water supply been pursued seriously since the 1990s. Planning is still not evident to achieve major changes in water supply and use, which means that additional desalination plants may be needed due to population growth and climate change. Ensuring water sustainability will also be a challenge in a number of regional areas.

There was a short-term water-saving efficiency gain target of 75GL by 2010/2011 for Melbourne. This will be achieved through a shortterm loan of water from a combination of existing water-saving projects, i.e. Central Goulburn 1234, Shepparton modernisation, and purchasing water from the Goulburn River water quality reserve. These savings will be built up (carried over) in Lake Eildon for use for Melbourne when the Sugarloaf Pipeline comes online in 2010/2011.

Potable water Positives that have contributed to the rating are: Potable water infrastructure is generally in a good condition, as reflected by the low percentage of non-revenue water Water conservation and efficiency programs have been effective The quality of planning has improved as can be seen in the sustainable water strategies Water pricing is becoming more reflective of water’s scarcity value and production costs. Negatives that have contributed to the rating are: The failure to take action earlier to meet the growing water crisis and the on-going water restrictions Concern that best value water solution had not been selected in several major water augmentation projects There has been inadequate public discussion to gain support for utilising recycled water for indirect potable use There are considerable risks in the desalination plant’s cost and commissioning date due to its short timeframe Concern about the long-term sustainability of water supply to many regional areas, particularly given the decline in water availability and the health of riverways.

Water

Wastew water

6.1

Summarry Infrastructture type

Victoria 2010 0

Wastew water

B-

Victtoria 2005

National 2 2005

National 2001

B Metropolitan

C+

C-

n-metropolitan B- Non

This rating recognises that t Melbourrne’s sewera age and treattment infrastrructure is effficiently managed and a effective, and the upg grading of the Eastern Trreatment Pla ant will produ uce much bettter environmen ntal outcome es. However,, failure to us se its recycle ed water is a waste of a valuable v resource. Insufficient atttention is be eing given to biosolid man nagement an nd to changin ng the centralised model of wa astewater co ollection and treatment to allow for mo ore local trea atment and reuse. Wasstewater trea atment infrasstructure in so ome regiona al areas is considered ina adequate. Since the la ast Report Card, C the major sewerage e and recycle ed water secttor developm ments have been: The exp ploration of th he use of larg ge volumes of recycled water w that will be produce ed from the upgrade ed Eastern Treatment T Pla ant and elsew where The rev view and development of the Melbourrne metropoliitan sewerag ge strategy Increase ed acceptance of recycle ed water and d its uses by the t commun nity The dev velopment off small-scale sewage min ning projects Recently co ompleted and in-progress major infra astructure pro ojects include e: The upg grade of the Eastern Trea atment Plantt to improve the t quality off the treated effluent outp put (comple etion expecte ed in 2012)243 2 The con nstruction of the Northern n Sewerage Project P in Me elbourne’s grrowing northern suburbs244 The rep placement of the Melbourrne Main Sew wer, which iss a 2.3km, $2 220 million prroject 245 (comple etion expecte ed in 2012) Commis ssioning the Gippsland Water W Factory y Spendin ng by Yarra Valley V Waterr of $250 milllion over the next 20 yea ars to replace e around 18,500 septic tanks by connectin ng those premises to the sewerage ssystem Challengess to improving wastewate er and recycled water infrrastructure in nclude: Finding uses for reccycled water Address sing climate change riskss for sewerag ge infrastructture

6.2

Infrastru ucture ove erview

6.2.1

scription Sewerage system des Victoria’s sewerage s wa ater infrastruccture compris ses: Sewers (33,978km of o sewer main) Pumping stations Wastew water treatme ent plants (tw wo primary tre eatment plan nts, 157 seco ondary treatm ment plants and a 36 tertia ary treatmentt plants).246

Water Victoria’s recycled water infrastructures comprise those wastewater treatment plants that produce water that is reused rather than discharged as wastewater. It also comprises recycled water distribution infrastructure, notably the reticulated third pipe systems. Sewage is produced by domestic households and by businesses/industrial operations (where it is known as trade waste). Charges for domestic sewage are based on a fixed volume charge that is indirectly based on household water usage. Charges for trade waste are based on volume and pollutant load. Trade waste pollutant charges are based on total Kjeldahlt nitrogen (TKN), inorganic total dissolved solids (ITDS),247 suspended solids and biological oxygen demand. As the volume of sewage is principally related to water use, the decline in water use over the last few years has seen a reduction in sewage. In 2007/08, the total volume of sewage treated in Victoria was 406,056ML which was 1.5% less than in 2006/07.248 There are three levels of wastewater treatment. Primary treatment. This treatment consists of sedimentation (sometimes preceded by screening and grit removal) to remove gross and settleable solids. The remaining settled solids, referred to as sludge, are removed and treated separately. Secondary treatment. This treatment removes 85% of biochemical oxygen demand (BOD) and suspended solids via biological or chemical treatment processes. Secondary treated reclaimed water usually has a BOD of < 20 mg/L and suspended solids of < 30 mg/L, but this may increase to > 100 mg/L due to algal solids in lagoon systems. Tertiary treatment. This treatment removes a high percentage of suspended solids and/or nutrients, and is followed by disinfection. It may include processes such as coagulation, flocculation and filtration.249 In 2007/08, less than 2.5% of sewage was discharged after only primary level treatment.250 Some 97.6% of sewage was treated to at least secondary level with 11.1% being treated to a tertiary standard.251 Table 6.1 details Victoria’s sewerage treatment plants and volumes. Table 6.1: Victoria’s sewerage treatment plants and volumes

252

Number

Number of

Number

Total

Volume

Volume of

Volume

secondary

of tertiary

number

secondary

of all

primary

treatment

primary

treated

tertiary

treated

treatment

plants

treatment

effluent

treated

effluent

plants

effluent

(ML)

effluent

(ML)

plants

(ML) Melbourne

Volume

(ML)

266,106

4,698

4,698 10,994

Water City West South East

9,028

1,966

Yarra Valley

404

7,822

8,225

Melbourne

275,538

14,485

290,023

Barwon

19,279

1,527

20,806

Central

1,456

7,334

8,790

796

8,168

8,964

Total

Highlands Coliban

The Kjeldahl method in analytical chemistry is a method for the quantitative determination of nitrogen in chemical substances developed by Johan Kjeldahl in 1883.

Wastewater Number

Number of

Number

Total

Volume

Volume of

Volume

secondary

of tertiary

number

secondary

of all

primary

treatment

primary

treated

tertiary

treated

treatment

plants

treatment

effluent

treated

effluent

plants

effluent

(ML)

effluent

(ML)

plants

(ML) East

Volume

(ML) 1,679

1,150

2,828

Gippsland Gippsland

8,697

14,278

4,181

27,156

Goulburn

12,374

505

12,879

GWMWater

3,353

Lower

1,140

4,071

5,211

North East

2,459

4,476

6,935

South

1,440

1,054

2,493

Wannon

8,630

8,709

Western

4,794

2,084

6,877

Valley

Murray

Gippsland

Westernport

1,032

Non-

149

176

9,837

75,639

30,557

116,033

157

195

9,837

351,177

45,042

406,056

Melbourne Total State-wide Total

Sewerage infrastructure can be divided into the two categories of metropolitan Melbourne and regional urban. Melbourne’s water businesses and their characteristics are listed in Table 6.2. 253

Table 6.2: Metropolitan water businesses’ sewerage characteristics Sewerage customers

Length of sewer main (km)

City West

333,205

3,708

South East

591,427

8,033

610,017

8,673

Not applicable

343

Yarra Valley Melbourne Water

Melbourne Water provides sewerage services to the metropolitan retailers. Melbourne has two main treatment plants that process 65.5% (266,106 ML) of Victoria’s sewage254 and over 92% of the city’s sewage. These plants treat all sewage to a secondary level. The two plants are: Western Treatment Plant in Werribee. This plant is a lagoon-based treatment process enhanced by the inclusion of activated sludge plants. It discharges treated effluent to Port Phillip Bay. Eastern Treatment Plant in Bangholme. This plant uses a chemically driven activated sludge process. It discharges treated effluent at Boags Rocks on the Bass Strait via a 56km pipeline. In 2008/09, the Eastern Treatment Plant treated about 41% of Melbourne’s sewage and the Western Treatment Plant about 52%. Figure 6.1 provides details of Melbourne Water’s sewerage infrastructure.

Water Figure 6.1: Melbourne Water’s sewerage system

255

Melbourne’s remaining sewage is treated at several small plants operated by Melbourne’s water retailers. Regional urban sewerage businesses provide services in regional cities and towns throughout Victoria. Their characteristics are listed in Table 6.3. Table 6.3: Regional urban water businesses’ sewerage characteristics Sewerage customers Barwon

Length of sewer main (km)

116,958

2,245

48,782

1,178

Coliban

56,040

1,733

East Gippsland

16,409

576

Gippsland

51,239

1,485

Goulburn Valley

43,952

1,170

GWMWater

24,654

636

Lower Murray

25,738

598

North East

38,638

1,036

South Gippsland

14,607

373

Wannon

33,219

859

Western

41,870

1,024

Westernport

12,875

308

Central Highlands

6.2.2

256

Recycled water system description Recycled water is water derived from sewerage systems that is treated to a standard appropriate for its intended use. There are four classes of recycled water quality with Class A being the highest.

Wastewater The categories are: Class A, which uses a tertiary treatment process combined with pathogen removal. Uses include residential garden watering, toilet flushing, irrigation of municipal parks and sportsgrounds, and food crops that are consumed raw or sold to consumers uncooked or unprocessed Class B, which uses secondary treatment process, combined with some pathogen reduction. Uses include irrigation of dairy cattle grazing fodder, urban (non-potable) uses with restricted public access and closed industrial systems Class C, which uses a secondary treatment process combined with minor pathogen reduction. Uses include water for cooked/processed human food crops, grazing/fodder for cattle, sheep and horses, and urban (non-potable) uses with restricted public access Class D, uses a secondary treatment process. Uses include water for non-food crops such as woodlots, turf growing and flowers.257 Recycled water can be used as a source of potable water, typically by injecting it into a water reservoir. This is called indirect potable reuse water. The Victorian Government currently has no plans to use recycled water for this purpose. Its priorities for the water are to replace potable water supply used for non-drinking purposes by industrial, agricultural and to a smaller extent, domestic customers. Recycled water can also be injected into underground aquifers where it can be extracted in periods of high demand. Aquifer recharge is also used to deliver environmental benefits such as displacing saltwater that has infiltrated into coastal aquifers or preserving the water levels in wetlands that are maintained by groundwater. The main sources of recycled water are the two Melbourne Water wastewater treatment plants. Class B water is currently available from the Western Treatment Plant and Class C water from the Eastern Treatment Plant.258 Following the upgrade of the Eastern Treatment Plant (ETP), expected to be completed in 2012, it will be able to produce between 110 and 130GL per annum of tertiary treated water. The key uses for this water were considered to be: The electricity power generators in the Latrobe Valley; about 130GL of water is used annually by the generators, principally in evaporative cooling Environmental flows in the Yarra River, which would allow more water to be retained in Melbourne water storages.259 In June 2009, the Victorian Government scrapped these options as they were considered too expensive. The Latrobe Valley option would have cost approximately $3.8 billion while the Yarra River option would have cost $2.1 billion. Instead, a series of smaller local projects will utilise the water. The Government estimates that new and existing users will consume around 7GL of Class A recycled water from the completion of the Eastern Treatment Plant upgrade in 2012.u South East Water and Melbourne Water have identified potential projects to use up to 40GL over the next thirty years.260 Uses for recycled water include irrigation, industrial processes and non-potable domestic uses. Benefits of recycled water include reducing the volume of nutrient-rich water entering the coastal and riverine ecosystems, and supplying nutrient-rich solids for agricultural purposes.

From 2012 the following projects will utilises Class A recycled water from ETP. • Boneo Recycling Project will receive 1.6 billion litres (and an additional 1.6 billion litres from Boneo Treatment Plant) for market gardens and for public open spaces. • Casey Residential Project will receive up to 2.8 billion litres for dual pipe systems including the Hunt Club Estate. • Dandenong Recycling Scheme will receive around 800,000 litres for industry, households and public open space. • Officer and Berwick South Project will receive 1.3 billion litres for dual pipe systems. • Mornington Recycling Project will provide 300,000 litres to irrigate the Mornington Racecourse and public open spaces (instead of Class C recycled water). • Frankston Community Recycling Scheme will receive 700,000 litres for public open spaces (instead of Class C recycled water).

Water Some 29% of all effluent across Victoria is recycled, with agriculture being the main user of recycled water as seen in Table 6.4. 261

Table 6.4: Volume of effluent recycle by use (ML) Urban &

Agriculture

industrial

Beneficial

Within

Return to

Total

% of

allocation

process

retailers

reuse

effluent

for reuse Melbourne Water City West South East Yarra Valley Melbourne Total Barwon Central Highlands Coliban East Gippsland Gippsland

553

27,481

15,930

13,255

20,695

77,914

29.6

1.6

1,009

891

669

2,569

22.1

322

240

1,533

2,094

23.1

1,884

28,612

15,930

15,530

20,695

82,651

28.6

1,473

1,303

2,776

13.7

161

268

189

618

7.4

1,267

2,023

3,290

49.9

1,603

1,127

2,730

100.0

686

632

1,354

5.9

Goulburn Valley

271

6,110

6,380

92.7

GWMWater

592

1,344

1,944

98.5

Lower Murray

103

2,500

2,604

60.8

North East

282

1,466

1,749

28.2

141

144

4.2

South Gippsland Wannon

127

1,489

1,615

17.3

Western 1

032

3,881

371

5,284

84.5

Westernport Non-Melbourne

127

212

20.2

3,954

23,112

1,759

1,876

30,700

30.5

5,838

51,724

17,689

17,406

20,695

113,351

29.1

Total State-wide Total

6.2.3

Policy and governance The Victorian Government’s strategic vision for sewage is that it does not diminish environmental health while providing, through recycling, a rainfall-independent source of water supply.262 With the 2010 target being reached by 2006/07, the Victorian Government announced new targets to substitute 6.2GL of recycled water for potable water by 2015 and 10GL by 2030.263 To encourage this, the Victorian Government has enabled Melbourne water businesses to mandate the take-up of third pipe reticulated recycled water in new residential developments.264 Reforms to the management of trade waste discharged into the sewerage system are expected following the soon-to-be-released Victorian Government’s Trade Waste Review. This review started in 2005 with the publication of an issues paper. It is expected that the review will lead to the modification of trade waste policy objectives, governance and regulation so that its generation, treatment and reuse meet the Government’s broader sustainable water and economic policy objectives, In late 2009, the Melbourne Metropolitan Sewerage Strategy was completed. This strategy identifies the actions that are required to build a robust sewerage system over the next 50 years taking into consideration possible changes to climate, urban growth, population and living standards. Central to the strategy is how sewage can contribute to integrated water cycle planning for Melbourne.

Wastewater Victoria’s has three main regulatory regimes for sewage and recycled water, primarily under the Water Industry Act 1994 and Water Industry Regulatory Order 2003. The regimes cover: Water quality Environmental impact Economic operation and pricing. The key multi-jurisdictional bodies and government agencies in addition to those in the Potable water section are: Environment Protection Authority (EPA): The EPA is responsible for setting policies and monitoring compliance of Victoria’s sewerage collection and wastewater treatment infrastructure. Essential Services Commission (ESC): The ESC is the independent economic regulator of water businesses, and it approves the price, quality and reliability of their activities.

6.2.4

Sector trends Growth in recycled water The growth in recycled water has been considerable over the last decade. In 1999, Victoria recycled just 2%, in 2007 it was 14%, and by 2009 it was over 30%.265 The major users of the recycled water are the wastewater treatment plants themselves. Growth in the use of recycled water outside of treatment plants has been much slower. Growth in sewer mining Sewer mining is the process of extracting wastewater as it flows towards the treatment plants, treating it to produce recycled water that is used locally, and discharging the wastewater including sludge and screenings back to the sewerage system. There are a number of small sewer mining schemes in Victoria including: At the Flemington Racecourse, which uses a membrane-based system to extract water for turf watering In the Council House 2 (CH2) building at 240 Little Collins Street, Melbourne, which uses microfiltration and reverse osmosis technology to produce 100kl per day of recycled water for toilet flushing, plant watering, cooling tower make-up, irrigation, filling of council street sweepers and water for council fountains.266 Sewer mining faces a number of challenges including the high cost of the produced recycled water, finding a suitable wastewater source that has the required flow rate and composition, ensuring that the volume of extracted sewage and returned concentrates does not impact on the sewerage network downstream, and risk management of the produced recycled water.

6.3

Performance Sewerage performance measures relate to: Frequency of mains sewer blockages; these blockages are typically caused by fats and tree roots and can lead to sewage spills, particularly during heavy rains Frequency of sewage spills; spills occur when the sewerage system cannot contain the sewage flow and overflows or leaks happen 267 Responsiveness to service failures, notably sewer spills and blockages Compliance with EPA discharge licences. For metropolitan water businesses, Table 6.5 shows the performance for the three years ending 30 June 2008, and proposed targets for the next regulatory period (2009/10-2012/13). The reason that there is no significant change over the current regulatory period is because the ESC’s approach

Water uses the average of the last three yearsâ&#x20AC;&#x2122; performance to set the performance target of the next period. Table 6.5: Core urban service standards

268

City West Water

South East Water

2005/6-

2009/10-

2005/6-

2009/10-

2005/6-

2009/10-

08/09

12/13

08/09

12/13

08/09

12/13

(actual) Number of sewerage

Yarra Valley Water

(actual)

27.6

19.5

21.3

45.3

23.4

45.9

48.3

50.6

115.9

161

246.9

249

100

99.99

100

2.7

blockages (per 100 kilometres) Average time to attend sewer spills and blockages (minutes) Average time to rectify a sewer blockage (minutes) Spills contained within five hours (%) Customers receiving more than three sewer blockages in the year (number)

Figure 6.2 illustrates the trend of sewer blockages over the last few years for both urban and nonurban water businesses. Generally, the level of sewage blockages in 2007/08 was 31.5 blockages per 100km which is a slight improvement from the preceding two years. The key reasons for the high rate at Coliban Water were ground conditions and failure of assets, and for Yarra Valley Water it was tree root infiltration into vitrified clay pipes in reactive soils. Figure 6.2: Sewer blockages per 100km of sewer mains

269

There is a direct relationship between blockages and spills, as seen by the fact that Coliban, Yarra Valley and Barwon Water businesses have both the highest number of blockages and the largest number of spills.270 To minimise the impact of spills, businesses seek to contain sewer spills as quickly as possible. The performance measure for containment is that they are fully contained within five hours. In 2007/08, all but four water businesses failed to contain 100% of sewer spills in five hours as illustrated in Figure 6.3.

Wastewater 271

Figure 6.3: Containment of sewer spills within five hours (%)

All sewage that is treated and discharged needs to meet EPA quality requirements as set out in the discharge licence requirements for each treatment plant. In 2007/08, most businesses reported close to 100% compliance with discharge requirements as illustrated in Figure 6.4. Reasons for compliance failures included saltwater infiltration into sewerage systems resulting in high electrical conductivity in effluent, and more focus on improving the efficiency and effectiveness of treatment processes rather than environmental protection. 272

Figure 6.4: Overall sewage treatment plant compliance (%)

Table 6.6 lists capital expenditure on Melbourneâ&#x20AC;&#x2122;s wastewater and recycled water projects over the current regulatory period (2009/10-2012/13).

Water Table 6.6: Key capital expenditure projects $million in January 2009 prices Proposed capital expenditure

2008/09

273

2009/10-2012/13

Total

project/program Melbourne Water Northern sewer project Eastern Treatment Plan tertiary treatment

192

279

294

303

135

175

West Werribee third pipe

Altona recycled water project

Melbourne main sewer augmentation City West Water

South East Water Third pipe recycled water Pakenham–Narre

113

160

Warren Sewer Yarra Valley Water Northern Sewer project

6.3.1

Epping-Craigieburn Sewer Project Stage 1

Epping branch sewer – Section 1

Environmental sustainability The Victorian Government requires that sewage treatment plant operators ‘ensure that the sustainable reuse of wastewater and treatment sludge is maximised wherever practicable and environmentally beneficial’.274 Thus, almost all of Victoria’s effluent is treated, with 29% recycled, and about 37% of biosolids reused in 2007/08.275 Wastewater transport and treatment generates greenhouse gas, notably methane. Considerable work is progressing to reduce greenhouse gas emissions such as capturing methane. For example, at the Western Treatment Plant, new biogaspowered generators are being installed so that by mid-2010 the plant will produce 95% of its power needs. Melbourne Water has set a goal to use only renewable energy and produce no emissions by 2018. Recycled water is currently generating 1.95 kg of carbon dioxide per cubic metre of water, and as a carbon cap and trade system enters the Australian economy, the cost of recycled water is likely to increase by 20%.276

6.4

Future challenges The challenges in achieving improvements in wastewater and recycled water infrastructure are: Finding uses for recycled water: With the completing of the Eastern Treatment Plant upgrade by 2012, the production of recyclable water will increase significantly. However, the use of recycled water will depend on customer demand, which is principally driven by price and application. The production and distribution costs of recycled water can be high, and if access to potable water increases due to the reduction in water restrictions, there is a possibility that demand for recycled water will decrease. If the price of recycled water is compared with desalination water ($2.40/kL), Melbourne Water has identified about 12 recycled water projects that could result in up to 10GL by 2030.277 However, as far more recycled water is produced, this water should be exploited rather than pumped out to sea. One use is indirect potable use but for this to be accepted, there will need to be a long-term campaign to shift public opinion. Addressing climate change risk for sewerage infrastructure: Climate change impacts for sewerage infrastructure occur as a result of rising sea levels combined with storm tides, ongoing drought, intense rains and rising average temperatures. Rising sea levels result in seawater ingress into sewerage networks causing salt load increases in sewage, flow increases, and concrete corrosion. Ongoing drought reduces the volume of flow causing pipe blockages and treatment challenges. Intense rains cause capacity problems, and rising

Wastewater temperatures can increase odour complaints. The water businesses recognise that climate change will have a significant impact on their operations, as seen in the 2009 Metropolitan Sewerage Strategy.

6.5

Report Card rating Infrastructure type

Victoria 2010

Wastewater

B-

Victoria 2005

National 2005

National 2001

B Metropolitan

C+

C-

B- Non-metropolitan

Based on considerations of planning, funding, and infrastructure capacity and condition, Victoria’s wastewater and recycled water infrastructure has been rated B-. This rating recognises that Melbourne’s sewerage and treatment infrastructure is efficiently managed and effective, and the upgrading of the Eastern Treatment Plant will produce much better environmental outcomes. However, failure to use its recycled water is a waste of a valuable resource. Insufficient attention is being given to biosolid management and to changing the centralised model of wastewater collection and treatment to allow for more local treatment and reuse. Wastewater treatment infrastructure in some regional areas is considered inadequate. Positives that have contributed to the rating are: Improvements to the quality of the wastewater from the Eastern Treatment Plant Production of the Metropolitan Sewerage Strategy Rollout of small-scale purple pipe and sewer mining projects High quality of wastewater infrastructure management. Negatives that have contributed to the rating are: Lack of uses for the large volume of recycled water from the Eastern Treatment Plant is a waste of a valuable resource Lack of a sustainable management plan for biosolids Slow progress towards the development of local wastewater treatment facilities and local recycled water projects The failure to significantly improve the quality of waste treatment facilities, and reduce the frequency and impact of sewerage system blockages and overflows in regional areas Failure to engage the public to gain their support in using recycled water for indirect potable use.

Water

Stormw water

7.1

Summarry Infrastructture type

Victoria 2010 0

Victtoria 2005

National 2 2005

National 2001

Stormw water

C-

This rating recognises that t there ha as been slow w improvemen nt in the quality of stormw water flow du ue to the insta allation of gro oss litter traps and other devices. d How wever there h has been no substantial improveme ent in the wid despread exp ploitation of the stormwatter resource. Since the la ast Report Card, C there ha ave been no major storm mwater develo opments. Challengess to improving stormwate er infrastructu ure include: Address sing climate change riskss Increasing stormwatter use.

7.2

Infrastru ucture ove erview

7.2.1

escription System de Victoria’s stormwater s in nfrastructure comprises: Enginee ered pipes, culverts, c chan nnels and rettarding basin ns (1,100km of major dra ains and 25,000kkm of other drains d in Melb bourne, and 11,000km off drains in re egional Victorria) Natural creeks and waterways w (5 5,000km of waters w in Melbourne) Stormw water water quality manag gement and re-use r infrasstructure. Stormwater is rainfall th hat runs off roofs, roads and a other surfaces. In Me elbourne, the e annual stormwaterr run-off into Port Phillip Bay B is about 537,000ML per year, wh hich exceeds s potable watter use of abou ut 400,000M ML per year.2778 The stormw water system m conveys sto ormwater run noff to receivving rivers, la akes and the ocean. The engineered d stormwaterr system is made m up of minor m (piped) and major (o overland) sys stems, which h discharge stormwater s through deve eloped areas. Infrastructu ure associate ed with these e systems includes ca atch drains, kerb k and guttters, stormwater pits, pip pes, culverts and headwa alls, open channels, overland o flow w routes and detention fa acilities. Pollutants originating o frrom many diffferent sources affect stormwater qua ality, ranging from fuel an nd oil from ourr roads to littter dropped on o our streets and sediment from buillding sites. Im mproving stormwaterr quality in th he long-term may require effective pre evention and d management of these pollutants at a their sourcce (not easy or economic c for diffuse sources), s as well as treatment of stormwaterr before it en nters our wate erways. In urban arreas, the incrreased propo ortion of impe ervious areas has reduce ed the amount of rain tha at either infiltrrates the ground or is reta ained by veg getation. Con nsequently, in ncreased quantities of stormwaterr run-off ente er the drainag ge system an nd the receivving waterwa ays. Urbanisa ation has alsso changed th he timing for stormwater discharged d in nto water environments. Traditionally y, stormwaterr drainage syystems have e been constrructed to rem move stormw water from urban areas as s quickly as possible in order to min nimise the rissk of flooding g and to prevvent water fro om becoming g stagnant. The T 93

Water increased volume entering waterways causes scouring (instream erosion) of waterways. In less modified catchments, the run-off water is released over a longer period of time and with lower peak discharges, thus maintaining healthier water environments. Growing emphasis on water quality management has seen the increased provision of retention facilities, wetlands, ponds and lakes, and structural devices to improve water quality (gross pollutant traps, litter baskets, sediment traps). A key purpose of stormwater assets is to provide an effective way to deal with run-off so that it does not cause flooding. The capacity of drainage systems, and hence their flooding risk, varies across Melbourne and generally reflects the age of the infrastructure. Prior to the 1970s, most drainage systems were designed to contain stormwater from a five-year storm event. Following 1975, with the introduction of the Drainage of Land Act, future subdivisions required drainage systems that could accommodate overland flows from a 100-year storm event. This requirement is now reflected in the Water Act and the Building Act. There is no statutory obligation on Melbourne Water and local government to bring older drainage systems up to the current standard.279 Ways to reduce flood damage to property include the prevention of inappropriate development in areas that are flood prone and, and in particular, requiring developments to be built that meet the one-in-100 year flood event. Flood mapping in the catchments serviced by Melbourne Water drains has identified around 82,000 properties that are at risk of flooding from overland flows in a 1% Annual Exceedance Probability (AEP) flood with approximately 37,000 properties vulnerable to flooding above floor level from these flows.280 The actual number of vulnerable properties in Melbourne is higher than this as the figures do not include those properties that are in local catchments serviced by local government drains.281

7.2.2

Policy and governance The Victorian Government has recognised that stormwater needs to be managed as part of an integrated water cycle, rather than simply from a drainage perspective. It recognises that it should be managed from an alternative water supply perspective as well as from a water quality perspective. It has also indicated that it will not place treated recycled water or stormwater directly into the drinking water supply system.282 The Government has stated that it expects water businesses to identify opportunities for stormwater use in new subdivisions. Key stormwater documents and programs are: Port Phillip and Westernport Flood Management and Drainage Strategy Victorian Stormwater Action Program DSE’s interim allocation framework for large-scale urban stormwater harvesting In 2006,283 the Victorian Government indicated that it would develop a State-wide Urban Stormwater Strategy that would establish the rules for the pricing and allocation of stormwater, and the responsibilities for treating and supplying urban stormwater (after it has been harvested) to retail customers. This strategy has not been finalised. Victoria’s stormwater legislative framework is comprised primarily of the following Victorian Acts: The Water Act 1989 establishes the management of harvesting entitlements. If a local government or business wishes to take urban stormwater from a waterway or drainage asset that is owned by a water organisation, they require a licence for the water allocation. When assessing an application for a diversion licence, the water organisation is required to consider matters in Section 40 of the Water Act 1989, including water availability and potential impacts on the environment and existing downstream water users. Licences are not required for stormwater generated on site, from roof run-off, or for stormwater harvested from a local

Stormwater

Â?

government drain. Licences are required for any works constructed (e.g. modifications to Melbourne Waterâ&#x20AC;&#x2122;s drains).284 The Environment Protection Act 1970 identifies Protection Agencies that are designated caretakers of river health requiring them to undertake actions to help achieve water quality policy objectives for rivers, creeks and bays. These include objectives for water quality pollutants such as nutrients, several heavy metals, suspended solids and bacteria that aim to protect beneficial uses of waterways. Protection Agencies are Catchment Management Authorities outside of Melbourne and Melbourne Water within Melbourne.

Key stormwater stakeholders have stated that the current roles, responsibilities and legal requirements for stormwater management are unclear in the areas of responsibilities for treatment and supply to retail customers.285 Stormwater assets can be divided into metropolitan Melbourne and regional urban categories. Stormwater assets in metropolitan Melbourne are owned by Melbourne Water and local governments. Melbourne Water is the regional drainage authority for the metropolitan Melbourne area and is responsible for maintaining 1,100km of major drains and 5,000km of waterways in major stormwater catchments covering areas in excess of 60 hectares. Local governments, responsible for managing drainage systems in smaller, local stormwater catchments, manage approximately 25,000km of constructed drains servicing an area of around 150,000 hectares.286 Melbourne Water is also responsible for providing a safe level of flood protection, while local governments do not have any statutory responsibility for floodplain management. Local governments are responsible for land-use planning. In regional areas, stormwater assets are owned by local governments. There are some 11,000km of local government drains287 in regional Victoria. To a lesser extent, VicRoads operates and maintains drainage infrastructure within its road corridors, including pavement drainage, cross-drainage structures, and water quality devices associated with roads under their control. Private developments operate and maintain some local onsite stormwater infrastructure, such as onsite detention systems and water quality control devices. Many local governments are currently gathering data on their stormwater systems as part of stormwater management studies and asset registers. As a result, at this stage identifying more accurately the extent of these assets across Victoria is not possible. Local governments have been preparing Stormwater Management Plans (SWMPs) which are local strategic programs integrating planning, design, source controls and structural controls. Under the SWMPs, local governments identified the priority actions they would undertake over a number of years. For many municipalities, SWMPs have initiated a continuing process of change in stormwater management.288 To assist local governments in developing and implementing stormwater management plans, the Environmental Protection Agency provides grants through the Victorian Stormwater Action Program. Melbourne Water and local governments fund the development and implementation of these plans for the metropolitan area.

Water 7.2.3

Sector trends Growth in harvesting stormwater Only about 0.25% of all stormwater is harvested in Melbourne.289 Potentially, stormwater could provide a significant source of new water. For example, it has been estimated that stormwater harvesting in new inner city developments can reduce demand for potable water by 35%.290 However, there are a number of challenges in achieving this. Stormwater varies in quality and the pollutants that it carries Water storage requires large areas if ponds are used, or expensive storage mechanisms such as tanks and using aquifers There is a lack of a framework for the pricing, treatment, distribution, and health and safety issues associated with stormwater. To utilise large volumes of stormwater, in the mid 2000s attention focused on investigating the potential large-scale stormwater harvesting schemes that could supply potable water. Proposals such as the 20GL per year Dights Falls scheme were found not to be viable due to high costs and a number of technical and environmental constraints. A small number of ambitious stormwater projects are still being considered such as the investigation by Barwon Water of the storage of stormwater in an aquifer for use in the Geelong region.291 However, small, localised stormwater projects continue to grow based around WSUD. Examples include: The Docklands stormwater system, which captures the water, drains it through one of three treatment wetlands in Docklands Park into a nearby water storage, and uses it to irrigate the park all year;292 A stormwater collection system to provide 10ML of water yearly to supply 100% of the water used by vehicles involved in street and drainage cleaning, road maintenance and construction, and tree watering at the City of Greater Geelong’s Anakie Road Operations Centre.293 Another area of growth in stormwater harvesting is rainwater tanks. An estimated 1GL of water is captured in rainwater tanks annually in Melbourne. Figure 7.1 displays the growth in the number of Victorian rainwater tanks.294 Figure 7.1: Victorian households with rainwater tanks

295

18 16 14 12 10 Households with rainwater tank (%)

8 6 4 2 0 1994

1998

2001

2004

2007

Stormwater Figure 7.2 displays the number of rainwater tank rebate claims made through the Victorian Government’s Water Smart Gardens and Homes rebate scheme. The data provides an indication of the demand trend since 2003. Figure 7.2: Victorian Water Tank Rebate claims

General Rainw ater Tanks

296

Large Rainw ater Tanks

Total Rainw ater Tanks

500 450

No. of Rebates

400 350 300 250 200 150 100 50 0 14/12/2009

15/9/2009

17/6/2009

19/3/2009

19/12/2008

20/9/2008

22/6/2008

24/3/2008

25/12/2007

26/9/2007

28/6/2007

30/3/2007

30/12/2006

1/10/2006

3/7/2006

4/4/2006

4/1/2006

6/10/2005

8/7/2005

9/4/2005

9/1/2005

11/10/2004

13/7/2004

14/4/2004

15/1/2004

17/10/2003

7.3

Performance Performance measures for stormwater systems relate to their: Ability to convey major storm events and eliminate/minimise flooding and consequential damage to private property or critical infrastructure Ability to maintain the long-term sustainability of natural systems from a water quality perspective, by minimising the discharge of pollutants and generally improving the quality of stormwater discharge. It is difficult to assess the performance of the stormwater system in isolation as it is affected by land use and building development policies that control building in flood prone areas and the uptake of water-sustainable urban design. In addition, there is no consolidated data on the assets. Some asset owners also do not have a good understanding of their asset quality. However, the following observations can be made about the quality of the assets: In Melbourne, most drainage systems built before the late 1970s were designed to contain stormwater from a five-year storm event. Properties developed where no provision was made for the overland flow of stormwater, are subject to flooding when the capacity of the underground drainage system is exceeded297 298 Melbourne Water’s asset management practices are close to best practice A number of local governments do not have a complete understanding of localised flooding risks. However, even if they did, they may have a limited capacity to address the problem due to the cost of increasing the flood resistance of at-risk structures or improving the drainage system The quality of stormwater assets will not markedly improve due to the cost of retrofitting and upgrading to standards compatible with water-sensitive urban design principles. Consequently, overland flooding incidents where many properties will be flooded in metropolitan Melbourne will occur as they did in 2003 and 2004.299 New developments with their better land use and building controls will be far less exposed to overland flows.

Water 7.3.1

Environmental sustainability Effective stormwater management can contribute to environmental sustainability by improving water quality and improving environmental flows. The State Environment Protection Policies – Guidelines for Urban Stormwater suggest that urban stormwater management should achieve a 45% reduction in nitrogen load, a 45% reduction in phosphorus load and an 80% reduction in suspended solids load.

7.4

Future challenges The challenges in achieving improvements in stormwater infrastructure are: Addressing climate change risks: Climate change science indicates that more extreme rainfall events will occur, resulting in more frequent and severe instances of overland flooding. Managing this risk involves identifying future rainfall patterns, locating areas that are vulnerable to overland flooding, and changing the design specifications of stormwater systems to accommodate the changed rainfall. Increasing stormwater use: Stormwater has considerable potential as a new water source. Water businesses and developers have implemented projects to capitalise on it. However, the projects can be expensive and only viable in certain circumstances, making their widespread use uneconomic and impractical. A challenge will be to maintain the focus on identifying viable stormwater projects and continue the application of water sensitive urban design principles.

7.5

Report Card rating Infrastructure type

Victoria 2010

Victoria 2005

National 2005

National 2001

Stormwater

C-

Based on considerations of planning, funding, and infrastructure capacity and condition, Victoria’s stormwater infrastructure has been rated C-. This rating recognises that there has been slow improvement in the quality of stormwater flow due to the installation of gross litter traps and other devices. However there has been no substantial improvement in the widespread exploitation of the stormwater resource. Positives that have contributed to the rating are: Widespread development of stormwater quality management plans and drainage strategies by local governments Increased uptake of water sensitive urban design Installation of gross litter traps. Negatives that have contributed to the rating are: Lack of a State-wide Urban Stormwater Strategy Limited exploitation of stormwater Limited capacity for local governments to fund stormwater infrastructure renewals and replacements Failure to incorporate changes in rainfall due to climate change in the design of stormwater systems.

Irrigatiion

8.1

Summarry Infrastructture type

Victoria 2010 0

Victtoria 2005

National 2 2005

National 2001

Irrigattion

C-

D-

This rating recognises the t increased investment in irrigation modernisatiion and efficiency. Projeccts like the Wim mmera Malle ee Pipeline and a the North hern Victoria Irrigation Re enewal Proje ect will lead to o dramatically improved irrigation i efficciency, howe ever, much of o this infrastrructure is yett to be S irrrigation plan nning and inv vestment is required r acro oss the rest of o the State. delivered. Substantial Since the la ast Report Card, C the major irrigation sector s develo opments havve been: The majjor investme ents in improvving irrigation n distribution n system efficciency The incrreasingly cha allenging con nditions for irrrigators due e to substantiially less watter and highe er average e temperaturres; in particu ular, the Murray-Darling basin b is suffe ering from 12 2 years of droughtt The Com mmonwealth h-Victorian water w agreem ment in June 2009 2 on acquiring water and trading volumess. Recently co ompleted and in-progress major infra astructure pro ojects include e: The Foo od Bowl Mod dernisation Project P costin ng $2 billion The Rob binvale High Pressure Syystem The Macalister Channel Automa ation Project. Challengess to improving irrigation in nfrastructure e include: Ensuring sustainable water supp ply in the fac ce of climate change and the rising de emand for water Ensuring the continu ual modernissation of irrigation infrastrructure.

8.2

Infrastru ucture ove erview

8.2.1

escription System de Victoria’s irrrigation infra astructure co omprises: Water storages s and weirs (64) Constru ucted open channels (17,934km of lin ned and unlin ned channelss) Natural streams (5,4 470km of rive ers and wate erways) Pipeline es (8,932km of gravity an nd pressurise ed pipes). Together, these t system ms store, disttribute and drain irrigation n water. Thiss section doe es not take in nto consideration ground water w extraction infrastruc cture relevant to irrigation n water. There are four f rural water service providers p of irrrigation in Victoria: V Goulburrn-Murray Water W which supplies wate er to the six management m t areas of Sh hepparton, Central Goulburn, Rochester-Ca R ampaspe, Py yramid-Boort, Murray Valley and Torrumbarry Lower Murray M Water which supp plies water to o irrigators along the Murrray downstre eam of Nyah h; in 2008 it was w combine ed with the First F Mildura Irrigation Tru ust Grampia ans-Wimmerra-Mallee Wa ater 99

Water

Southern Rural Water which supplies water to the three irrigation districts of Macalister, Bacchus Marsh and Werribee.300

Table 8.1 identifies the characteristics of each service provider. Table 8.1: Key irrigation characteristics of rural water service providers (2007/08)

301

Goulburn-

Grampians

Lower Murray

Southern Rural

Murray Water

Wimmera-Mallee

Water

Water Number of storage(s) Number of weir(s)

7 8

Regulated river (km)

4317.5

Unlined channel (km)

6363.3

7,077

29.3

570

22.4

Lined channel (km)

579.9

36.9

25.6

471.7

Pipe (km)

1024

6,956

780

Drainage – unlined channel (km)

3,089

24.1

573

Natural waterway (km)

Drainage – lined channel (km) Drainage – natural waterway (km) Drainage – pipe (km)

2.2 26.9 1.8

Total carrier (km)

1,5421.8

90.2 14,160.6

1,368.6

1,916.9

Total supply network intake volume

959,887

76,084

64,089

221,927.4

(ML)/volume supplied at customer service points (ML)

Of Victoria’s irrigation systems, the most important are those in the Goulburn and Murray irrigation areas. These areas account for over 70% of Victoria’s stored water and historically provided 3,500GL of water for irrigation annually.302 They contain 14,000 irrigators who contribute $1.5 billion annually to Victoria’s economy.303 Figure 8.1 displays the irrigation areas in the Goulburn-Murray Irrigation District. Figure 8.1: Irrigation areas in the Goulburn-Murray Irrigation District

100

304

Irrigation 8.2.2

Policy and governance The Victorian Government’s vision for irrigation infrastructure is that it stores and distributes water efficiently and applies the water to be used intelligently. Importantly, the infrastructure should enable the key policy objective of allowing water to flow across regions to its highest value use. The use, flow and control of all surface water and ground water in Victoria rest with the State Government. The Minister for Water is responsible for allocating water at the bulk level via the granting of bulk entitlements and to the Minister for the Environment for environmental purposes. Bulk water entitlements are managed by rural and urban water corporations. The Victorian Government allows water trade to some extent between States. Bulk entitlements are held by water organisations. Both permanent and temporary transfers of bulk entitlements are possible, either between organisations (water corporation or a catchment management authority), or an organisations and an irrigator. Organisations may also acquire water shares and licences and convert them to a bulk entitlement or add them to an existing bulk entitlement. The detailed governance framework is illustrated in Figure 8.2. The irrigation-relevant elements are as follows. Regional sustainable water strategies are statutory instruments made under the Water Act 1989 for the management and use of water resources. They aim to ensure ongoing secure water supplies in a manner that is environmentally sustainable. Streamflow management plans are developed under the Water Act 1989 to manage the water resources of unregulated waterways that are under stress, or where there is a demand for more development. Bulk entitlement is a right to use and supply water. Water shares/delivery shares/water use licences. Under a bulk entitlement, rural water organisations supply water to holders of water shares. Water shares are a share of the water available for consumption; they can be owned independently of land and are tradeable. Trade of water shares and allocations are subject to the ministerial trading rules and the approval of the relevant rural water organisation. Delivery shares are rights to have water delivered to a property within an irrigation district. They remain attached to the land (even if all water shares are traded away) although they can move, subject to approval, to other land within an irrigation district. A water use licence is an organisation to use water on a property for irrigation purposes.305 In June 2009, the Australian and Victorian Governments reached agreement on water reforms. The new agreement will enable the Australian Government to acquire 300GL of water entitlements over the next five years from 2008/09, over and above those purchases already permitted under Victoria’s 4% annual cap from irrigation districts. Under the agreement, and subject to a review of progress on the modernisation project, Victoria will begin to phase out the 4% cap on permanent water trades from irrigation districts from July 2011, with a view to removing the cap entirely by 2014. In addition, water trades associated with the Commonwealth’s Small Block Irrigator Exit Grant Package in Victoria will be allowed to proceed immediately, regardless of the 4% cap. Overall, the Australian Government expects to acquire 460GL water entitlements from willing sellers over the five years from 2008/09. The Australian Government’s $12.9 billion Water for the Future plan includes $3.1 billion to purchase water from willing sellers to put back into the Basin’s rivers and wetlands, and $3.7 billion in commitments already made to Basin State priority projects.306

101

Water Figure 8.2: Victorian water governance arrangements relevant for irrigation Environmental water reserve assessments

307

Water Act 1989 Regional Sustainable Water Strategies

Long term water resource assessments

Minister for Water Department of Sustainability and Environment (DSE)

National, state and regional policies, plans and agreements

Streamflow management plans (unregulated rivers (incl. trading conditions)

Bulk entitlements White Paper: Our Water Our Future

Groundwater management plans (incl. trading conditions)

Stakeholder groups and the community Regional Urban Water Authority

Water shares/ water use licences

Rural Water Authority

Water shares/ delivery shares water use licences

Irrigators Urban customer outside district

inside district

State Management Rules (unregulated rivers)

Take and use licences (bundled systems only)

Licence holders (irrigation/ commercial)

Key multi-jurisdictional bodies and government agencies are as follows: Murray-Darling Basin Authority. The Authority is responsible for planning the integrated management of water resources of the Murray-Darling Basin. National Water Commission. The Commission is the lead Australian Government agency for driving national water reform under the National Water Initiative, Australia’s blueprint for how water will be managed in the future. Department of Sustainability and Environment (DSE). The DSE has prime responsibility for water management in Victoria and the water allocation framework Essential Services Commission (ESC). The ESC determines the price for rural water charges under the Essential Services Commission Act.308 Watermove. Watermove is a water exchange run by Goulburn-Murray Water on behalf of the DSE and the other rural water authorities.

8.2.3

Sector trends Improvements in irrigation infrastructure Much of Victorian irrigation infrastructure was built over 100 years ago and as such suffers from high water losses. In the Goulburn-Murray Irrigation District, an estimated 30% of water is lost as a result of leakage, seepage and evaporation in channels, meter inaccuracies and overflows at the end of the channels.309 In the past, irrigation infrastructure improvements have been small-scale and focused on local areas. In 2007, the Government announced the Food Bowl Modernisation Project, designed to modernise irrigation infrastructure in the Goulburn-Murray Irrigation District to reduce water loss.310 There are two stages of the project. Stage 1, due for completion in 2012, involves a $1 billion investment program to save 225GL/year of water. The saved water will be shared equally among

102

Irrigation irrigators, the environment and Melbourne. Melbourneâ&#x20AC;&#x2122;s water component will be progressively delivered via the 70km Sugarloaf Interconnector starting in the first half of 2010. The Victorian Government will fund $600 million, Melbourne Water $300 million and Goulburn-Murray Water $100 million.311 Work includes installing automated regulator gates at over 750 sites in the major delivery channels, and lining channels through the region. Stage 2 is designed to capture 200GL and will cost up to $1 billion. The Australian Government has agreed in principle to contribute up to 90% of the project costs. It will involve the further modernisation of irrigation infrastructure in the Goulburn-Murray Irrigation District.312 The project is being planned, designed and delivered by Northern Victoria Irrigation Renewal Project, a state-owned body established by the Victorian Government. As part of improving the efficient use of water, the Victorian Government is investigating the feasibility of building an interconnector to enable water to bypass the Barmah Choke. This is a narrow section of the Murray River near the town of Barmah that limits the volume of water that can be moved along the river to supply peak demands downstream of the Choke. The proposed Murray-Goulburn Interconnector would also enable water from the Murray Valley irrigation area to be used within the Goulburn system. The bypass would enable the interconnection of the Southern Murray Darling Basin systems: the Goulburn system (1,900GL average annual use), the Victorian Murray system (1,600GL) and the NSW Murray system (2,000GL).313 Figure 8.3 shows the above projects. Figure 8.3: Food Bowl Modernisation and the Sugarloaf Interconnector

314

103

Water Others projects of significance are the: Macalister Channel Automation Project. This involves modernising parts of the Main Northern Channel system within the Macalister Irrigation District. The project aims to yield at least 5GL average annual water savings. Robinvale High Pressure System. This $40.5 million project, due for completion in November 2009, will modernise the Robinvale irrigation district with a 78.6km high pressure system.315 A project yet to be approved is the Sunraysia Modernisation Project. This $106 million infrastructure upgrade program will modernise irrigation supply infrastructure in the Merbein, Mildura and Red Cliffs Irrigation Districts to provide a year-round supply to customers. The Victorian Government is expected to make a decision on this by late 2009.316

8.3

Performance The most important performance measure is the level of service provided compared to the agreed or designed standard of service. This is addressed by the Rural Water Corporations, Essential Services Commission and National Water Commission’s national performance reporting. Specific infrastructure performance measures: Delivery system efficiency and unaccounted irrigation water Availability of assets to hold, supply and distribute water Response to reported channel leaks. The delivery efficiency reduces with the increase in water lost. Water loss can occur through: Evaporation water lost to the atmosphere Seepage of the movement of water through the beds of irrigation channels Leakage of water through channel banks and structures Operational losses due to theft, outfalls, system fill, unmetered diversions and inaccurate metering317 Outdated irrigation delivery systems. Table 8.2 lists several indicators on irrigation systems. Table 8.2: Selected irrigation indicators for 2007/08.

318

Goulburn-

Grampians

Lower Murray

Southern Rural

Murray Water

Wimmera-Mallee

Water

Water Environmental management plan or

Yes

0.9%

0.3%

Not available

Economic real rate of return

-0.0084%

-0.0240%

-2.88%

Not available

Capital expenditure per current

0.9%

50%

16%

Not available

system in place for the reporting period Is the environmental management plan or system certify Maintenance expenditure as a percentage of current asset replacement cost

asset replacement cost

Water loss components are well addressed through the Water Savings Protocol for the Quantification of Water Savings from Irrigation Modernisation Projects (includes Technical Manual) and the audits of water savings being regularly conducted.

104

Irrigation

8.4

Future challenges The challenges in achieving improvements in irrigation infrastructure are: Ensuring sustainable water supply in the face of climate change and rising demand for water. Climate change is likely to decrease the total amount of rainfall and runoff, and the volume available to irrigators. As the population and the economy grows, total demand for water will also increase. The National Water Commission estimates that in the order of 30% less water could be available for irrigated agriculture in northern Victoria in the years ahead.319 Thus the water supply for irrigation is likely to decline over time, making the continual irrigation efficiency improvements more important, and the cessation of irrigation likely in marginal areas Ensuring the continual modernisation of irrigation infrastructure. Improvements in irrigation infrastructure will rely on the rollout of automated technology that has the flexibility to adapt to changing water availability and shifting customer demand. A challenge to achieving this is to ensure the water organisations price their services so that the technology can be maintained and adapted over its service life.

8.5

Report Card rating Infrastructure type

Victoria 2010

Victoria 2005

National 2005

National 2001

Irrigation

C-

D-

Based on considerations of planning, funding, and infrastructure capacity and condition, Victoria’s irrigation infrastructure has been rated C-. This rating recognises the increased investment in irrigation modernisation and efficiency. Projects like the Wimmera Mallee Pipeline and the Northern Victoria Irrigation Renewal Project will lead to dramatically improved irrigation efficiency, however, much of this infrastructure is yet to be delivered. Substantial irrigation planning and investment is required across the rest of the State. Positives that have contributed to the rating are: Improvements in irrigation infrastructure, notably due to the Victorian Foodbowl Modernisation Project, the Murray-Goulburn Interconnector and the Sunraysia Modernisation Project Negatives that have contributed to the rating are: Lack of an State-wide irrigation strategy that reflects the likely significant reduction in irrigation water to northern Victoria Concern that water savings from irrigation projects are overestimated The lack of committed funding for Phase 2 of the Foodbowl Modernisation Project.

105

Water

106

EN NER RGY Y Integra ated energ gy policy and a provis sion The last few w decades have h seen a trend t toward ds integrating g policy, plan nning and ope eration of different en nergy source es. The key driver d for this is the realisa ation that the e most efficie ent use of energy, and d largest imp provements to t the reliability and secu urity of energy supply, come from managing energy e secto ors as an inte egrated netw work rather th han individua ally. ment has adopted this inte egrated enerrgy approach h as reflected d in its energy The Victorian Governm policy state ements and its support in n developing national elecctricity and g gas markets, including a national inttegrated energy regulatorr and markett operator. The trend towards t integ grated energ gy has resulte ed in both ve ertical integra ation and cro oss-sector ownership of energy co ompanies. Ve ertical integra ation betwee en electricity retailers and d generators is occurring as a a way to manage m the risk r of price volatility v in th he electricity spot market..v In Victoria,, both AGL Energy E and TRUenergy T o own electricitty generation n and retail in nterests. Cro oss-sector ownership is occurring because of the t synergies s of the enerrgy supply ch hain. In Victo oria, Singapo ore Power International ow wns electricityy transmissio on and distrib bution networrks, as well as a gas transmissio on and distrib bution pipelin nes. Key Victorian energy po olicy docume ents are sum mmarised in the table belo ow. Electricitty and gasspecific policy documen nts are conta ained in the relevant r secttion. Victorian Government enerrgy policies an nd strategies Policies and d strategies

Description n

Future Enerrgy Statement:

This statem ment is expected d in 2010.

Meeting Victoria’s Energy Challenge (fforthcoming) Ministerial statement s on energy (200 08)

This statem ment identified th hat the following g four actions ne eed to be simulttaneously pursu ued: • Increase e renewable ene ergy use • Produce e more gas-fired d power to repla ace coal generattion • Produce e near-zero emis ssions from coa al, using carbon capture and sto orage • Increase e the efficiency of o energy use

Energy For Victoria (2002)

320 0

This is the State’s S current energy e policy do ocument and ha as the following objectives: • Ensure an a efficient and secure energy system • Ensure those t supplies are a delivered re eliably and safelyy • Ensure consumers c can access energy at affordable prrices • Ensure our o energy supp plies and the wa ay we use them m are environmentally sustainab ble and in particular less grreenhouse inten nsive

321

The Austra alian Governm ment is curre ently preparin ng an Energyy White Pape er but this will not be finalised un ntil the Carbo on Pollution Reduction R Sc cheme and associated a le egislation are e resolved.3222 The most recent r articulation of the Victorian V Government’s energy e prioritties is contaiined in the 2009 State ement of Govvernment Inte entions. This s states that the t Governm ment wants to o move Victo oria towards a cleaner c and more sustain nable energy y future by: v

If wholesa ale prices rise, the t retailer can balance the inccrease cost against higher gene erator earners.

1 107

Energy

Investing in lower emissions technologies Supporting secure, renewable energy Encouraging greater energy efficiency Supporting the establishment of a national emissions trading scheme.323

Recent State energy policy initiatives include: A commitment to reduce greenhouse gas emissions from households by 10% by 2010 and Victoria’s overall emissions by 60% by 2050 The Energy Saver Incentive/Victorian Energy Efficiency Target (VEET) that commenced on 1 January 2009 which aims to encourage the uptake of energy efficient technology, initially in the residential sector; this scheme will eventually be transitioned into the national Renewable Energy Target (RET) scheme. The target itself is called the Victorian Energy Efficiency Target (VEET) and its public name is the Energy Saver Incentive. The Greenhouse Gas Geological Sequestration Act 2008 which provides a legal framework enabling the onshore injection and permanent storage of greenhouse gases Releasing new offshore areas for energy exploration. In 2009, four offshore areas in the Victorian Otway Basin were released for oil and gas exploration Introducing the Electricity Industry Amendment (Premium Solar Feed-in Tariff) Act 2009 which provides an additional return to Victorian households installing small-scale solar photovoltaic systems.

Despite the policy and program initiatives, Victoria has significant challenges in ensuring reasonable cost energy in the future due to its dependence on brown coal-fired generation, and extensive, but limited natural, gas resources. Case study: Mortlake gas powered power station The Mortlake Power Station is illustrative of several energy trends occurring in Victoria. Firstly, the 550MW power station currently being built by Origin Energy uses natural gas as its fuel source. Natural gas has become the preferred fuel source due to the lower greenhouse gas output per unit of electricity compared to coal-fired generation. The open cycle gas plant used at Mortlake will produce approximately 50% less greenhouse gases than existing brown coal-fired generators and 30% less than new black coal-fired power stations. Secondly, the generator is being built by a vertically integrated energy company rather than a generation specific company. Origin Energy undertakes gas and oil exploration and production, as well as energy retailing. Vertical integration involving electricity generation and retail offers a way to manage the risk of price volatility in the electricity spot market. Thirdly, Mortlake’s location increases the geographic diversity to generation in Victoria. The benefits of diversity are that both system security and system efficiency increase. The power station is located beside the Moorabool to Heywood 500kV high voltage transmission line and is near major loads in western Victoria, thus reducing transmission losses compared with the majority of generators, which are in the Latrobe Valley.324 The Mortlake Power Station is expected to be commissioned in 2010.

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Electriicity

9.1

Summarry Infrastructture type

Victoria 2010 0

Victtoria 2005

National 2 2005

National 2001

Electrricity

C-

C+

B-

This rating recognises that t investme ent in gas an nd renewable e generation has increased, and transmissio on and distrib bution assetss are in a rea asonable con ndition. Howe ever, the dem mand-supplyy balance rem mains tight, and a the futurre of coal-fire ed generation n is uncertain n due to both h the future carbon pricce and the prracticality of clean coal te echnology. The transmisssion and disttribution system is also vuln nerable to exxtreme weath her events that are prediccted to becom me more freq quent due to climate cha ange. Insufficcient attentio on has been given g to dem mand manage ement as a way w to reducce peak dema and. Since the la ast Report Card, C the major electricity sector deve elopments ha ave been: Transfer of regulatory responsib bility for electricity transmission and distribution to the Australia an Energy Regulator Creation n of Australia an Energy Market Operattor (AEMO) taking t over V VENCorp’s fu unctions The com mmissioning of wind turbines generatting over 400 0MW Electriciity connectiv vity has increased betwee en Victoria an nd the other States which h provides cost, se ecurity and re eliability bene efits The rem moval of conttrol on retail electricity e priices The dev velopment off the Victorian Renewable e Energy Target (VRET) scheme, wh hich requires that elecctricity retaile ers purchase e a minimum of 10% rene ewable energ gy by 2016, up u from the current level of arou und 4%325 The con ntinuation of the Energy Technology T Innovation I Strategy (ETIS S), which res sulted by August 2009 in more e than $370 million being g allocated fo or clean enerrgy research h and largescale de emonstration n projects The intrroduction of the t solar pan nel feed-in ta ariff that resulted in house eholders with h solar panels on their roof receivin ng 60 cents credit c per kilo owatt hour fo or electricity ffed back into o the grid within that yea ar, which is about a four tim mes the curre ent cost of ele ectricity in Victoria326 The com mmencemen nt of the smart electricity meter m roll-ou ut that involve es installing 2.5 2 million meters by the end of o 2013. Recently co ompleted and in-progress major infra astructure pro ojects include e: 140MW W Bogong Pow wer Station (commission ( ned in 2009) 320MW W Laverton No orth Power Station S (comm missioned in 2006) Murraylink interconn nector conne ecting SA and d Victoria’s electricity e grid ds (commiss sioned in 200 02) Basslink k interconnecctor connectting Tasmaniia and Victorria’s electricitty grids (com mmissioned in n 2006).

Challengess to improving electricity infrastructure i e include: Ensuring that new generation g is built for a grrowing population Ensuring supply sec curity Delivering clean coa al technologyy Maintain ning the supply of natura al gas Impleme enting dema and managem ment.

1 109

Energy

9.2

Infrastructure overview

9.2.1

System description Electricity infrastructure refers to stationary electricity networks that comprise interconnected electricity transmission and distribution systems, together with connected generating systems, facilities and loads. It includes non-renewable and renewable generation. It excludes mobile generators and non-grid connected electricity systems. Victoria’s physical electricity infrastructure comprises: Generation (9,600MW) Transmission networks (6,533km) Distribution networks (134,349km) Retail companies. The physical elements work within a market structure called the National Electricity Market (NEM). The NEM spans Victoria, Queensland, NSW, ACT, SA and Tasmania. There are some 275 registered generators across the NEM that offer to supply power and their output is bought by retailers. The central coordination of the dispatch of electricity from generators is the responsibility of the AEMO. Figure 9.1 illustrates the inter-relationship between the physical and financial components on the NEM. While generation and retail has been opened to competition, due to the nature of transmission and distribution networks, these are regulated monopolies. Figure 9.1: Structure of the National Electricity Market (NEM)

327

physical electricity flows transmission network

distribution network

plant dispatch instructions

load dispatch instructions *

AEMO determines the amount of power required

generators

supply offers

consumers

purchase bids *

electricity settlement payments

financial contracts * currently no customers submit demand side bids

Generation Over 70% of Victoria’s electricity generation comes from five brown coal-fired generators, with four of the five located in the Latrobe Valley. They are at Anglesea near Geelong and the Latrobe Valley power stations of Hazelwood, Loy Yang A, Loy Yang B and Yallourn. Natural gas-fired generation plants provide the second largest source of electricity. Hydro electricity accounts for approximately 6% of Victoria’s capacity, and approximately 1.4% is provided by wind farms. Coal-fired plants provide the baseload due to their low cost of operation. Gas-fired plants are used for intermediate and peaking purposes due to their higher cost but quick start-up time. Investment in generation (excluding wind) has been flat since 2001/02 as seen in Figure 9.2. The bulk of new investment in Victoria is to provide intermediate and peaking capacity to meet summer demand peaks.328

110

Electricity Figure 9.2: Annual investment in new generation capacity

329

New non-renewable plants likely to be completed in the next few years are listed in Table 9.1. The majority of these are gas-fired generation, reflecting the need for peaking power. Table 9.1: Major committed and proposed generation investments in the National Electricity Market in Victoria Developer

Power station

Technology

Capacity (MW)

330

Planned commissioning date

AGL Energy

Tarrone

Gas

500

2012

HRL Group and Harbin Power

Latrobe Valley

IDGCC

500

2013

Mortlake Stage

CCGT

470

n/a

Engineering Origin Energy

2 Origin Energy

Mortlate

OCGT

518

2010

Santos

Shaw River

CCGT

500

2012

The Commonwealth Government’s $1.5 billion Solar Flagship program and the Victorian Government’s Large Scale Solar program are currently seeking proposals for large scale solar projects, which are hoped will come online in 2015.331 Transmission Victoria’s transmission network, part of the NEM, can be divided into: Interconnectors that link Victoria’s intrastate network with SA, NSW and Tasmania transmission networks Intrastate networks that consists of over 6,500km, linking generators to distribution networks. Victoria’s transmission network is illustrated in Figure 9.3.

111

Energy Figure 9.3: Victorian electricity and gas transmission networks

332

Interconnectors Interconnectors connect the transmission networks of different jurisdictions. They enhance competition by allowing multiple generators to compete to supply as well as to improve security and reliability of supply. Table 9.2 lists details of Victoria’s interconnectors. Table 9.2: Victoria’s interconnectors Network

333

Location

Line Length (km)

Owner

2006/07 Murraylink (Red Cliffs to

Vic-SA

180

Berri) Basslink

Energy Infrastructure Investments (Marubeni 50%, Osaka Gas 30%, APA Group 20%)

Vic-Tas

375

CitySpring Infrastructure Trust (Temesek Holdings (Singapore) 28%)

Intrastate transmission network The intrastate transmission network was a government utility until it was privatised in the 1990s. It was first acquired by GPU PowerNet in 1997, bought by Singapore Power International in 2000, and floated as part of SP AusNet in 2005. Table 9.3 lists details of the network. While the transmission network is privately owned, its planning and investment decisions are made by AEMO. It directs network augmentation and also buys bulk network services from SP AusNet for sale to customers. Table 9.3: Victoria’s transmission networks Network

SP AusNet (SPI PowerNet)

334

Line Length

Max Demand

Current

Regulated Asset

(km)

(MW) 2007/08

Regulatory

Base

Period

($ Million)

6,533

9,850

2008/09 to 2013/14

2231

Owner

Listed company (Singapore Power International 51%)

112

Electricity Distribution Victoria’s electricity distribution network consists of over 255,000km of powerlines that supply the urban and rural areas in Victoria.335 Details of Victoria’s five electricity distributors are listed in Table 9.4. Table 9.4: Victoria’s distribution networks Network

Operational

name

Area

336

Line Length

Customer

(km)

Numbers

Current

Owner

Regulatory Period

Jemena

Western

Electricity

metropolitan

Networks

337

5,775

299,662

1 Jan 2006-

Jemena (Singapore Power

31 Dec 2010

International (Australia))

Melbourne

SP AusNet

Eastern

(SP AusNet)

Victoria

United

South-eastern

Energy

metropolitan

46,039 12,858

592,263 619,666

1 Jan 2006-

SP AusNet (listed company;

31 Dec 2010

Singapore Power International 51%)

1 Jan 2006-

Jemena (Singapore Power

31 Dec 2010

International (Australia)) 34%;DUET-

Melbourne CitiPower

Inner

Group 66% 6,485

297,568

metropolitan

1 Jan 2006-

Cheung Kong Infrastructure/Hongkong

31 Dec 2010

Electric Holdings 51%;

Melbourne Powercor

Western

Spark Infrastructure 49% 82,459

668,680

Victoria

1 Jan 2006-

Cheung Kong Infrastructure/Hongkong

31 Dec 2010

Electric Holdings 51%; Spark Infrastructure 49%

Retail Victoria currently has more than 13 energy retailers offering services in Victoria. The majority of the market share is held by the three host retailers, TRUenergy, AGL and Origin Energy as seen in Table 9.5. Table 9.5: The market share of Victoria’s electricity retail sector by retailer during 2008/09 Retailer

9.2.2

Domestic customers

Business customers

AGL Energy

25%

24%

Origin Energy

21%

22%

TRUenergy

23%

Other

31%

338

Policy and governance There have been considerable changes in the governance of the Victorian electricity sector over the last two decades. Twenty-five years ago, there was one generating enterprise, the State Electricity Commission of Victoria (SECV), a small number of buyers (SECV and 10 councils) and no market. Today there are 11 generation businesses, 23 retailers and a national electricity market that connect all the eastern and southern States.339 The key change has been moving from a centrally planned electricity sector to a market-based one. A key component of the Victorian Government’s vision for its electricity sector is reflected in its agreement to the national electricity objective. This is to promote efficient investment in, and efficient operation and use of, electricity services for the long-term interests of consumers of electricity with respect to price, quality, safety, reliability and security of supply of electricity; and the reliability, safety and security of the national electricity system.340 Key documents to guide the development of electricity networks are summarised in Table 9.6.

113

Energy Table 9.6: Key electricity planning documents Document

Description

Vision 2030 Update

Vision2030 provides a 25-year vision for Victoria’s gas and electricity transmission networks. It identifies development paths for each of the major energy transmission corridors, and identifies transmission augmentation projects.

Victorian Annual Planning Report (VAPR)

VAPR is published annually by AEMO. It provides a five- and ten-year outlook that allows stakeholders to make decisions relating to planning generation and transmission facilities and formulating market strategies.

Electricity Statement of Opportunities (ESOO)

341

ESOO is published annually by AEMO and provides a 10-year forecast to assist market participants assess the future need for electricity generating capacity, demand side capacity and augmentation of the network to support the operation of the NEM. It includes a year-by-year annual supply-demand balance for Victoria and other regions as a snapshot forecast of the capacity of generation and distribution.

National Transmission Statement (NTS) & National

These documents are published by AEMO in its role as the National Transmission

Transmission Network Development Plan (NTNDP)

guide investment in the power system. In 2009 an interim NTS was produced which

Planner for the electricity transmission grid. The annual network development plans replaced the previous Annual National Transmission Statement produced by NEMMCO. This document will be superseded by the NTNDP from 2010. The NTNDP will provide historical data and projections of network utilisation and congestion, summarise emerging reliability issues and potential network solutions, and present information on potential network augmentations and non-network alternatives and their ability to address the projected congestion.

Transmission Connection Planning Report

342

Each year, the Victorian electricity distribution businesses produce the Transmission Connection Planning Report as part of their responsibility for planning and directing the augmentation of the facilities that connect their distribution systems to the shared transmission network. The Report provides an assessment of the magnitude, probability and impact of loss of load for each transmission connection; details of each distributor’s planning standards; and a description of feasible options for meeting forecast demand at each transmission connection including opportunities for embedded generation and demand management.

Distribution System Planning Reports

343

Each distributor produces an Distribution System Planning Report, and its purpose is to provide information about the distributor’s assessment of its system’s capacity to meet demand over the next five years, and the distributor’s proposed plans for augmentation of its network

The NEM is governed by the National Electricity Rules, which are made under the National Electricity Law. The National Electricity Law is applied as law in Victoria by application statutes. The National Electricity Rules provide the detailed standards that govern participation in, and the operation of, the NEM. The National Electricity Rules replace the National Electricity Code that specified the rules from 1998 to 2005. The NEM is continuing to evolve with the most recent change occurring on 1 July 2009, when the management of the electricity spot market and the central coordination of the dispatch of electricity moved from the National Electricity Market Management Company (NEMMCO) to AEMO. Key multi-jurisdictional bodies and government agencies are: Australian Energy Markets Operator (AEMO). Responsible for overseeing the reliability and security of the NEM, managing the NEM and national transmission planning for the electricity transmission grid. VENCorp (Victorian Energy Networks Corporation) was Victoria’s energy transmission planning organisation, and was subsumed by AEMO from 1 July 2009. Australian Energy Market Commission (AEMC). The AEMC became responsible for rulemaking, market development and policy advice on the NEM from 1 July 2009. Australian Energy Regulator (AER). The AER has responsibility for the enforcement of and compliance with the National Electricity Rules, as well as responsibility for the economic regulation of electricity transmission and distribution. The AER issues infringement notices for certain breaches of the National Electricity Law and Rules, and is the body responsible for

114

Electricity

Sector trends Growing electricity demand The demand for electricity varies with the time of day, weather, seasons, economic growth and a range of other factors. The peak demand period is when ambient air temperature is high, resulting in air conditioners being switched on. Each State and Territory generally has different peak periods that enable supply across the NEM to flow to meet peak demand in a particular jurisdiction. This is seen in the peak demand periods over 2008/09 as follows: 8,707 MW in Queensland in February 2009 14,289 MW in New South Wales in July 2008 10,494 MW in Victoria in January 2009 3,314 MW in South Australia in January 2009 and 347 1,740 MW in Tasmania in July 2008. Regional peak demands and the resulting national peaks are shown in Figure 9.4. 348

Figure 9.4: Combined peak demand and demand for each region

40000

20000 18000

35000

16000 30000 14000 25000

12000

20000

10000 8000

15000

Regional demand (MW)

6000 10000 5000 0

Summer… Winter 99 Summer… Winter 00 Summer… Winter 01 Summer… Winter 02 Summer… Winter 03 Summer… Winter 04 Summer… Winter 05 Summer… Winter 06 Summer… Winter 07 Summer… Winter 08

Market-wide demand (MW)

9.2.3

bringing court proceedings in respect of breaches.344 It is part of the Australian Competition and Consumer Commission. Energy and Water Ombudsman (Victoria). The Ombudsman handles complaints against electricity companies by customers, notably over the provision and supply of a service (or the failure to provide or supply it), billing, credit and payment services, disconnections and restrictions, refundable advances (security deposits) and land and property issues.345 Energy Safe Victoria (ESV). The ESV is the safety regulator responsible for electricity in Victoria. It aims to encourage compliance with the Electricity Safety Act 1998 and its regulations through education, co-operation and enforcement.346 Department of Primary Industries (DPI). The DPI’s Energy Division is responsible for electricity-related policy and programs including feed-in tariffs, clean coal technology, the Energy Technology Innovation Strategy (ETIS) and the Smart Meters program. Essential Services Commission (ESC). The ESC is the regulator for electricity retailers and manages licence arrangements for the distribution and sale of electricity in Victoria, and ensures compliance by licensees with conditions in codes and guidelines about service standards and appropriate market arrangements and conduct.

4000

Market-wide demand (MW)

2000

South Australia

Tasmania Victoria Queensland New South Wales

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Energy

Victoriaâ&#x20AC;&#x2122;s annual average growth in electricity consumption is 1.2% while the summer peak is growing at 2.2%.349 These growth rates depend on factors ranging from economic and population growth, number of domestic air-conditioners, ambient air temperature and success of demand management measures. Based on a series of assumptions350 about the availability of committed new capacity over the next few years, Victoria will have a reserve deficit in 2009/10 and from 2012/13 onwards.351 The reserve deficit in 2009/10 for Victorian and South Australia will be 219MW, due to the use of interconnector transfers and changing generation shutdown dates. The shortfall is not expected to cause reliability problems.352 w The AEMO produces a prediction of demand and supply for the following 10 years. The August 2009 summer outlook for the combined Victoria and SA market is provided as Figure 9.5. 353

Figure 9.5: Victorian and South Australian summer outlook (as of August 2009)

17500

Capacity (Megawatts)

17000 Additional Capacity Required (Vic or SA)

16500 16000

MT PASA Available Capacity

15500 15000

Additional Capacity Requirement (SA)

14500 Allocated Installed Capacity

14000 13500

20 18 /

20 17 /

20 16 /

20 15 /

20 14 /

20 13 /

20 12 /

20 11 /

20 10 /

20 09 /

13000

Growing wind power generation and its impact on electricity networks Wind power is rapidly growing as a source of generation in Victoria, and its deployment is to accelerate due to the RET program. See Figure 9.6. Figure 9.6: Summer installed wind generation capacity (MW) in Victoria

354355

Capacity (Megawatts)

3000 2500 2000 1500

Announced Projects (Assumed to proceed) Advanced Proposals

1000 Committed 500 Existing

20 06 -0 20 7 07 -0 20 8 08 -0 20 9 09 -1 20 0 10 -1 20 1 11 20 12 12 -1 20 3 13 -1 20 4 14 -1 20 5 15 -1 20 6 16 -1 7

Currently, wind accounts for 6% of Victoriaâ&#x20AC;&#x2122;s generation potential capacity, compared to SA where it is 17%. Table 9.7 lists the operating, approved and planned wind power generators in Victoria.

In 2008 it was predicted that the shortfall would have been much larger but due to the global economic crisis, electricity demand is forecast next year to be lower by 5.4%. 10% POE Average, Probability of Exceedence (POE) refers to the probability that a forecast maximum demand figure will be exceeded. For example, a forecast 10% POE maximum demand figure will, on average, be exceeded only one year in every 10. AEMO, 2009, 2009 Electricity Statement of Opportunities: Executive Briefing.

116

Electric city Table 9.7: Vic ctoria’s wind energy e industry y (June 2009)

35 56

Status

Wind Energy pacity (MW) Cap

Major opera ating wind farmss

427.7

Approved wind w farms (not operational) o

1,553.7

Planning permit applications lodged with Minister M for Plann ning (permit pro ocess under wayy)

540.5

Planning permit applications lodged with th he Council (perm mit process und der way)

29.9

Permit applications yet to be lodged with Minister M

702

Referred to Minister for Planning for decision on the need for an EES

564

Planning (fe easibility) stage

587

Total

4,404.8

There are two t key prob blems with wiind. Firstly, wind w farms are often loca ated in places s that are a considerab ble distance from f existing g generation and consum mer areas. Th his means tha at new grid connections may be req quired as we ell as augmentation of exxisting transm mission lines to reduce t intermitte ent nature off wind genera ation can cau use risks to system s congestion. Secondly, the reliability and security. This T requiress having add ditional confirrmed rapid disputable generation on standby. In 2008, VE ENCorp relea ased the results of a stud dy estimating g that up to 4 4,000MW of wind w power capacity co ould be connected to Victtoria’s transm mission netw work without m major technic cal difficultiess. VENCorp did d not propo ose to set an absolute lim mit on the con nnection of w wind power generation.3577 p to reduce r gree enhouse gas s volumes from fr electric city generato ors Growing pressure Different ge eneration tecchnologies produce differrent amountss of greenhouse gasses as a illustrated d in Figure 9.7. Victoria’s main m baseload d generators s use brown coal, c which iss the most ca arbonproducing. Figure 9.7: Lifecycle greenh house gas emiissions from ellectricity generration

358

Brow wn coal (subcriticcal)

Brown co oal (subcritical)

Black coal (subcritical)

oal (subcritical) Black co

Blac ck coal (supercriitical)

Black coal (supercritical)

Natural Ga as (OCGT)

Natura al Gas (OCGT)

atural Gas (CCG GT) Na

Natura al Gas (CCGT)

Nuclear

Solar PV V

Solar PV

Wind

Hydro o

Hydro

2 200

400

600

800

1000

1200

1400

1 1600

Emissio ons (kg CO2 - e e/MWh)

Consequen ntly, the pricing of carbon n in Australia a’s future Carrbon Pollution Reduction Scheme (CPRS) or another scheme is likelyy to have a significant imp pact on the fiinancial viability of these b creating a reluctance tto invest in new coal generators. The propossed CPRS iss alleged to be electricity generation g in nfrastructure and difficultie es in rolling over o debt forr the generattors. As there is no substitute in the shorrt and medium term for th he baseload generation frrom the coalfired plantss, the Victoria an and Austrralian Govern nments have e been workin ng to ensure that they ca an continue to o operate und der a carbon constrained d economy. This T has resu ulted in:

1 117

Energy

Investment in new technology to reduce greenhouse gas emissions, such as the Integrated Drying Gasification and combined cycle Exploration of sites for carbon sequestration, e.g. the Victorian Government has provided $5.2 million to investigate potential carbon storage sites in the Gippsland basin Development of Carbon Capture and Storage (CCS) technologies following pre- and postcombustion processes, e.g. governments have provided $110 million to fund large-scale, precommercial CCS demonstration projects The creation of Clean Coal Victoria. This organisation develops strategic resource plans to manage Victoria’s coal resources, provides detailed information about current resources, and undertakes test drilling to determine the quality and quantity of brown coal resources in underexplored areas The creation of the Brown Coal Innovation Australia (BCIA). This organisation will manage new clean coal research funds and seeks to secure funding from the Commonwealth Government’s National Low Emission Coal Council and other R&D grant programs. The BCIA is expected to be operating by the end of 2009.

Since 2002, the Victorian Government has invested over $244 million in clean coal through the Energy Technology Innovation Strategy (ETIS). Growing concern on water availability for thermal generation Coal-fired generators are significant consumers of water. Across Australia, thermal power stations account for around 1.4% of total water consumed. The water is consumed in generating steam, cooling and blowdown. Table 9.8 lists the water consumption rate of Victoria’s key coal generators. Droughts reduce the water available for all users, including generators. The impact of the drought in Victoria was seen in 2007 when capacity limitations were placed on hydroelectric and coal-fired generation plants.359 Each year, the AEMO produces the Drought Scenarios Investigation report that explores the impact of water availability on unserved energy (USE). The December 2009 update found that if low rainfall occurs and the existing water allocations to Victorian generators materialise, then the USE will be higher than the recommended maximum of 0.002% over the next 12 months,360 and Victoria faces a reduction over the next three years in capacity of between 2% and 13% depending on the month.361 In the past, unallocated water has been sold to the generators to allow them to continue to operate, as not all of the area’s water is fully allocated.x Latrobe generators have also reduced their demand by making significant improvements in water efficiency over the last decade. For instance, at Loy Yang Power, improvements since 1991 have resulted in water consumption dropping from 3.6 ML/GWh to 2.2 ML/GWh.362 In 2007, the Victorian Government in cooperation with the generators undertook a study of the options for supply of water to the Latrobe Valley generators. As well as examining further efficiency measures such as adding antiscalants to reduce the need for blowdown, the report examined options such as using treated effluent and seawater as feedwater.363 While in the short-term, water availability has been guaranteed to the generators, over the longer-term, climate change and increasing water demand from other users will result in water security issues.

Water resources in the Latrobe Valley are not fully allocated. The Victorian Government has a capacity entitlement around 35% of the water stored in Blue Rock Dam. This has been sold on a temporary basis to power stations in periods of low inflow. National Water Commission, 2009, Water and the electricity generation industry: Implications of use, Waterlines Report Series No. 18, pp. 55-56.

118

Electricity Table 9.8: Water access arrangements for Latrobe Valley generators Generator

Category

Water use

364

Source

Contractual Arrangement

Yallourn Power

Coal – natural draft

Low quality water –

Blue Rock Dam, Lake

Station

cooling tower

36.5 GL/year with

Naracan plus Latrobe River

around 15 GL/year

passing flows.

(1450MW)

Bulk water entitlement

returned to the river system, a net consumption of 21.5 GL/year Loy Yang A

Coal-fired – natural

High quality water

High quality water from

High quality water

Power Station

draft cooling tower

around 1 GL/year,

Moondarah reservoir, low

supplied under

low quality water

quality water from Blue

contract from

around 25 GL/year,

Rock Dam, Lake Naracan

Gippsland Water on a

ground water around

and Latrobe River passing

volumetric basis. Low

10 GL/year

flows – 40 GL/year bulk

quality water supplied

water entitlement.

under a bulk water

Groundwater from mine

entitlement.

(2200MW)

dewatering. Loy Yang B

Coal-fired – natural

1 GL/year high

High quality water for

High quality water

Power Station

draft cooling tower

quality water, 17

domestic services water ex

supplied under

GL/year low quality

Moondarra Reservoir. Low

contract (Water

water

quality water from Blue

Services Agreement)

Rock Dam, Lake Naracan &

from Gippsland Water.

Latrobe River under a 20

Low quality water

GL/year entitlement.

supplied under licence

(1000MW)

from Southern Rural Water. Hazelwood

Coal-fired – cooling

Total water use

Around 13 GL/year supplied

Supplied under

Power Station

pond

around 27 GL/year

from Moondarra Reservoir.

contract from

Around 12 GL/year supplied

Gippsland Water –

from mine dewatering plus

total entitlement of 22

another 2 GL/year from

GL/year. Supplied

other sources.

under a licence limited

(1600MW)

in use to electricity generation. Morwell Co-

Coal-fired – natural

generation

draft cooling tower

Power Station

co-generation

7.1 GL/year

Supplied from Moondarra

Contract with

Reservoir.

Gippsland Water.

(170MW)

9.3

Performance

9.3.1

NEM reliability and security The performance of the NEM is based on the criteria of: Reliability, which is the availability of adequate bulk supply to meet consumer demand. The current standard for reliability is that there should be sufficient generation and bulk transmission capacity so that no more than 0.002% of the annual energy of consumers in any region is at risk of not being supplied; that is, unserved energy (USE) is less than 0.002%. Security, which is the continuous operation of the power system within its technical limits. The AEMC Reliability Panel is responsible for determining the standards for reliability and security against which the national electricity system’s performance is to be assessed. In terms of reliability, Victoria has only once fallen outside the reliability standard. This was in 2000 and due to a coincidence of industrial action, high demand and temporary unavailability of generating units in Victoria.365 Victoria’s most significant recent security events were: 119

Energy

9.3.2

On 16 January 2007, when a major event occurred on the interconnected power system during bushfires in northern Victoria. The event resulted in all connection with interstate networks being lost and automatic load-shedding caused 33 minutes-off-supply for the average Victorian customer.366 On 29 and 30 January 2009, Victoria experienced 43ºC temperatures creating enormous electricity demand and loss of supply. Load shedding occurred on both days with nearly 4,000mwh being shed on 30 January to maintain system security following an incident at one generator. On 8 February 2009, the combination of high temperatures and bushfires affecting transmission lines from the Latrobe Valley resulted in load being shed on three separate occasions across the day.367

Transmission Being a natural monopoly, transmission networks are subject to economic regulation so that third parties can use the network for the carriage of electricity at an appropriate price. The AER determines a revenue cap for each network under the National Electricity Rules. This cap sets the maximum allowable revenue that a network can earn during a regulatory period and takes account of the need for the transmission company to cover its costs while providing a commercial return to the owner. The AER determination in 2007 of SP AusNet’s revenue cap reflects the expectation that there is an increased need for network investment. The currently regulatory period (2008/09 to 2013/14) allows for a 60% increase over the previous regulatory period. In addition, the AER supported network augmentation investment by VENCorp of around $200 million.368 The level of investment is illustrated in Table 9.9. Table 9.9: SP AusNet network investment ($ million) Network

2003

2004

2005

369

2006

2007

Actual Investment SP AusNet

2008

2009

7-year total

Forecast Investment 74

103

111

116

583

SP AusNet’s performance targets and their achievements are set out in Table 9.10. Table 9.10: Performance against service targets — SP AusNet Performance measure

2004

2005

370

2006

2007

2008

Target (2008)

Total circuit availability (%)

99.27

99.34

99.25

99.11

99.12

98.73

Peak critical circuit availability (%)

99.97

99.94

99.88

99.75

99.80

99.39

Peak non-critical circuit availability

99.57

99.86

99.79

99.86

99.93

99.40

99.80

99.75

99.54

99.32

99.42

98.67

99.39

98.21

98.97

95.78

99.53

98.73

164

452

1,856

226

382

292

398

431

326

263

412

(%) Intermediate critical circuit availability (%) Intermediate non-critical circuit availability (%) Frequency of lost supply events greater than 0.05 mins Frequency of lost supply events greater than 0.30 mins Average outage duration — lines (minutes) Average outage duration — transformers (minutes)

120

Electricity Over the short and medium terms, Victoria’s intrastate transmission network is expected to be able to carry the forecast demand following the commissioning of the current and near-term augmentation projects.371 In addition, the implementation of the new Victorian fault level management strategy, and the incorporation of its 5-10 year fault level information into VENCorp’s VAPR, will enhance reliability and security.372

9.3.3

Distribution Performance on the distribution network is measured by: Reliability and quality of supply, which in turn is measured by: System average interruption duration index (SAIDI). The sum of the duration of each sustained customer interruption (in minutes), divided by the total number of distribution customers. SAIDI excludes momentary interruptions (one minute or less duration) System average interruption frequency index (SAIFI). The total number of sustained customer interruptions, divided by the total number of distribution customers. SAIFI excludes momentary interruptions (one minute or less duration) Momentary average interruption frequency index (MAIFI). The total number of customer interruptions of one minute or less duration, divided by the total number of distribution customers373 Customer service/customer relations, measured by efficiency and responsiveness of service providers in handling issues such as complaints. Table 9.11 lists the aggregate performance measures for all distributors excluding abnormal events which is provides an insight into the underlying reliability of assets. Table 9.11: Supply reliability for all distributor performances 2003-2008 excluding abnormal events All

2003

2004

2005

2006

2007

2008

distributors

374

Change: 2007 to 2008 (%)

Average minutes off supply per customer (SAIDI) Planned

17.8

26.4

26.8

30.0

31.1

27.8

-11%

Unplanned

143.6

105.8

138.4

135.5

165.8

200.4

0.2%

Total

161.4

132.3

165.2

165.4

196.9

228.3

16%

Average number of interruptions per customer (SAIFI) Planned

0.08

0.13

0.12

0.13

0.12

-2%

Unplanned

2.10

1.75

1.68

1.81

2.00

1.57

-0.2%

Total

2.18

1.88

1.80

1.94

2.12

1.70

-20%

Average interruption duration (CAIDI) Planned

211.1

203.1

220.0

229.0

244. 7

227.7

-9%

Unplanned

68.5

60.6

82.5

75.0

83.0

127.6

0.5%

Total

74.0

70.5

91.9

85.4

92.7

134.6

45%

Average number of momentary interruptions per customer (MAIFI) Whole

1.90

1.84

1.99

1.56

1.70

1.62

-5%

1.24

1.42

1.04

0.80

0.96

1.04

6,579

6,663

7,333

8,653

8,583

9,494

11%

Unplanned

18,389

17,001

19,020

18,541

19,185

19,374

0.0%

Momentary

2,171

2,116

2,313

1,912

2,154

2,017

-6%

27,139

25,780

28,666

29,106

29,922

30,885

Feeder Part Feeder Number of outages Planned

(Whole Feeder) Total

121

Energy The average total minutes-off-supply per customer is graphed in Figure 9.8. While distributors’ unplanned performance (i.e. less excluded events) worsened in 2006 and 2007, it improved in 2008. Excluded events are those that are outside the control of the distributors such as load shedding due to lack of generation capacity, transmission network failures and exceptionally severe storms. In 2006 and 2007, performance targets were not achieved, but were achieved in 2008. 375

Figure 9.8: Average total minutes-off-supply per customer in Victoria for all distributors

The volume of operational and maintenance activity invariably reflects the performance of networks. All the distributors have spent less on operations and maintenance in the last few years than in their forecasts as illustrated in Figure 9.9. Part of this reduced expenditure may be attributed to improved asset management processes, notably a move to condition monitoring. Figure 9.9: Operating and maintenance expenditure by electricity distributors

376

One of the results of this has been that the financial returns on all distributors’ regulated assets were higher than forecast for 2007, and continue the trend that prevailed through the 2001-05 regulatory period. Other reasons included: Higher revenue than forecast (all distributors) Less money spent on operating and maintenance (four distributors) 122

Electricity

Less money spent on capital works (three distributors) Customer contributions to capital works were higher than forecast (all distributors).377

In terms of distribution losses, Victoria’s networks are consistent with international experience. Electrical losses in a network increase with line length and are proportionate to the amount of power carried, and vary with network use, network configuration, the shape of the load profile and the level of reactive power support. The ESC considers that losses for urban networks should be 3% to 5% of sales and for rural networks should be up to 10%. In 2005/06, the urban-based distributors (Alinta AE, CitiPower and United Energy) had network losses of 4% to 5% in 2005/06, while Powercor and SP AusNet (with predominately rural networks) had about 7% and 8% respectively.378 Improvements in distribution networks are expected to occur following the regulator’s decision in May 2009 to increase allowable rates of return, which in turn is expected to increase expenditure on maintenance and capital projects. These improvements should reduce those outages which are within the control of the distributors. An increase in wind storms and other extreme types of weather due to climate change may result in increased outages, as there is little that distributors can do to prevent these in the short to medium term. However, the response to them should improve following the lessons learned after the windstorm of 2 April 2008.y

9.3.4

Environmental sustainability Electricity companies manage their environment risks through an Environmental Management System (EMS), typically certified to the International Standard ISO 14001. For distributors, key environmental risks are: Management of assets containing polychlorinated biphenyls (PCBs) Oil and chemical spill response Electro-magnetic field enquiries Noise management Recycling and waste management Effect of work on flora and fauna. Specific environmental improvements pursued include: Reducing transmission losses. For example, since 1997, united energy distribution has reduced transmission losses by the equivalent of 100,000 tonnes of CO2-e379 Reducing the carbon footprint of the organisation. In September 2008, the WWF released its Fossil Fuel Power Generator Scorecard. It assessed generator owners on the three factors of low emission generation mix, pollution reduction targets, and low emissions research and investment. It awarded four out of five stars to Babcock and Brown Power, and TRUenergy, three stars to International Power and two stars to Loy Yang Power.

9.4

Future challenges The challenges to achieving improvements in electricity infrastructure are: Ensuring that new generation is built for a growing population: Investment in generation assets is principally determined by the private sector. With concerns about the financial viability of coal-fired plants due to the pricing of carbon and the increased attractiveness of renewable energy due to the Renewable Energy Targets (RET), investment over most of this decade has

The windstorm on 2 April caused significant damage to distribution networks in the eastern and south-eastern suburbs of Melbourne. The storm’s impact on the electricity distribution networks was far more significant than for any other recorded storm event and overall, the review found that the response was largely well managed.

123

Energy

9.5

been in wind and gas-fired plants. No new thermal plants have been built in Victoria in the recent past. A significant expansion of low cost, reliable generation will be required to meet future demand, and due to Victoria’s connection to the National Electricity Market, this generation need not be built in the State. The viability of novel large scale generation, specifically nuclear, geothermal and solar thermal power, needs to be examined from a technical, political, financial and environmental perspective by governments as this is unlikely to be undertaken by the private sector due to their risk. The challenges in developing novel large generation is reflected in the difficulties in building the Mildura solar thermal generation plant, which will cost significantly more than that funded under the existing Commonwealth’s Solar Flagships Program. Ensuring supply security: The electricity supply-demand balance is tight and is likely to remain so due to the fact that new generation investment decisions will only be made if there is sufficient demand to ensure that the assets make a reasonable return. The consequence of this is that if demand experiences extraordinary spikes or supply falls unexpectedly, brownouts or blackouts may occur as there is little reserve capacity. An example of such a disruption was during the January 2009 heatwave when blackouts occurred following the loss of the Basslink Interconnector. The interconnector was deliberately shut down because the air temperature at the Tasmanian end of the cable exceeded its design limits, meaning that continued operation would risk physical damage.380 Future investment is required to ensure security of supply. Delivering clean coal technology: If clean coal technology is not commercially viable or impractical for several decades, the Latrobe Valley brown coal generators may become commercially unviable, creating a huge supply shortfall. Maintaining the supply of natural gas: Known reserves of natural gas may be significantly depleted by 2030, and there is no guarantee that any new reserves will be found. Supplies will diminish more quickly if greater volumes of east coast natural gas are supplied to the international LNG market. A decline in domestic natural gas will increase prices, making gasfired generation plants increasingly costly to run. Implementing demand management: Demand management has the significant potential to reduce peak demand. Ways to achieve this include having time-based pricing for electricity consumption and paying large consumers to scale back demand on days when consumption is very high. One initiative under way to advance demand management is the Smart Meter rollout. This involves installing smart meters covering 2.4 million homes and businesses across Victoria. These meters will provide two-way communication between electricity meters and distributors, making more immediate information about electricity use available to all parties. The meters will enable granulated time-of-use pricing to be implemented. The demand impact of these meters will depend on the difference between peak and non-peak price, take up rate of new time-of-use tariffs, and how customers respond to price signals.381 There are a number of structural and cultural reasons why demand management has had limited impact on electricity consumption, and changing practices will be required to realise the benefit of managing demand.

Report Card Rating Infrastructure type

Victoria 2010

Victoria 2005

National 2005

National 2001

Electricity

C-

C+

B-

Based on considerations of planning, funding, and infrastructure capacity and condition, Victoria’s electricity infrastructure has been rated C-. This rating recognises that investment in gas and renewable generation has increased, and transmission and distribution assets are in a reasonable condition. However, the demand-supply balance remains tight, and the future of coal-fired generation is uncertain due to both the future carbon price and the practicality of clean coal technology. The transmission and distribution system is also vulnerable to extreme weather events

124

Electricity that are predicted to become more frequent due to climate change. Insufficient attention has been given to demand management as a way to reduce peak demand. Positives that have contributed to the rating are: Electricity connectivity has increased between Victoria and the other States which provides cost, security and reliability benefits Attention has increased on reducing demand and increasing efficiency Rollout of the smart meters has commenced Investment in gas-fired plants and renewable energy generation has increased Reliability and security standards have become better linked to investment criteria. Negatives that have contributed to the rating are: Maintenance, upgrades and new investment in coal-fired generation have slowed as a result of uncertainty about the impact of the future price of carbon Uncertainty exists about the provision of baseload electricity over the long-term, including a lack of a serious public discussion on the nuclear, geothermal or other sources to replace the coalfired plants if they become unviable Off-supply time due to wind storms and other extreme events has increased Increasing population and increasing electricity demand resulting in a reserve deficit from 2009/10 Uncertainty associated with clean coal technologies.

125

Energy

126

Gas

10.1

Summarry Infrastrructure type

Victoria a 2010

Victoria 2005

Nationa al 2005

National 2001

Gas

C C+

This rating recognises that t improvements are be eing made to o the operation of the gas s market and d the quality of gas plann ning information. Howeve er, asset quality has not ssignificantly im mproved and d the Principa al Transmisssion System remains vuln nerable to sin ngle points o of failure. Sig gnificant expansion in gas-fired generation g w require ad will dditional inve estment in ga as transmission pipeliness. Since the la ast Report Card, C the major gas secto or developme ents have been the: Introduc ction of a new w regulatory regime for gas g transmisssion networkks Remova al of the price e control for retail gas Significa ant productio on expansion n in the Otwa ay and Bass basins Introduc ction of the national n gas market m bullettin board thro ough the pro ovision of gas s system and d market information Creation n of a short-tterm trading market (STT TM) that facilitates the short-term trad ding of gas between n pipelines, participants p a production centres to and o balance wh holesale gas demand and d supply Growth in summer gas g demand due to high level of gas power generration. Recently co ompleted and in-progress major infra astructure pro ojects include e: Comple etion of the Brooklyn to La ara Pipeline (BLP), which h increased tthe capacity from the Otw way Basin Near co ompletion of the t Victorian n Governmen nt $70 million n Natural Gass Extension Program initiated d in 2003 to connect c 34 to owns to natural gas.

Challengess to improving gas infrasttructure inclu ude: Meeting g long-term demand d Impleme enting dema and managem ment.

10.2

Infrastru ucture ove erview

10.2.1

escription System de Gas infrasttructure referrs to reticulatted natural gas infrastruccture. Victoria a’s gas infras structure comprises the following g componentts: Producttion and stora age (370 pettajoules per year y of naturral gas) Transmission Distribution (1,743,5 525 gas mete ers and 28,469km of mains) Retail companies. The Reportt Card does not cover liquefied petroleum gas (LP PG), biomasss and other fuel f gases. Figure 10.1 1 illustrates the entities and physical flows f in the Victorian V natural gas sector. Produce ers extract and d refine the gas, g and sell gas directly to large custtomers, retailers or traderrs. Supply is also provided from interconnecting pipelines and storage pro oviders. Tran nsmission pipelines carryy 1 127

Energy the gas under high pressure to city gates (also known as gate stations/custody transfer meters) that control and measure the gas flow into the distribution network. The odorant is normally added to make the detection of gas leaks easier. The distribution network takes the gas from the gates and distributes it via high, medium and low pressure pipelines to the customerâ&#x20AC;&#x2122;s meter/regulator set. The customer pays the retailer for the gas. The retailer buys the gas from producers, and pays the transmission and distribution businesses for transporting the gas.z Retailers must balance their purchase and sale contracts to ensure security of supply. Retailers also operate customer call centres and implement customer demand curtailment in the event of major gas shortages. Due to the closeness of Victoriaâ&#x20AC;&#x2122;s main production sites with the main consumption sites of Melbourne and Geelong, it only takes between six and eight hours for the gas to be produced and delivered.382 Figure 10.1: Schematic of natural gas entities and physical flows

Producers

Interconnecting pipelines

Injections

Storage Providers

Traders

Withdrawals

Transmission and Distribution Systems

Large Customers

Retail Customers

Retailers

Traders

Storages

Interconnecting pipelines

Production and storage Victoria has considerable natural gas reserves that are located in three natural gas basins. The total reserves are 7,337 petajoules, or nearly 14% of Australiaâ&#x20AC;&#x2122;s reserves as seen in Table 10.1. Victorian natural gas reserves that are currently known are expected to meet demand for at least the next 15 to 30 years.383 Table 10.1: Natural gas reserves and production in Australia

384

Production (2008/09

Proved and probable reserves (June 2009)

Gas source/Basin

Petajoules

% of domestic

Petajoules

sales

% of Australian reserves

Victorian conventional natural gas Gippsland (Vic)

230

23.0

5,625

9.3

Otway (Vic)

116

11.6

1,291

2.1

1.8

286

0.5

Total of natural gas (Australia)

852

85.0

39,079

64.9

Total coal seam gas

148

14.8

21,178

35.1

Bass (Vic)

The charges are known as transmission use of system (TUOS) and distribution use of system (DUOS).

128

Gas The largest basin is the Gippsland Basin, which supplies 23% of Australia’s and over 86%385 of Victoria’s gas demand. The Otway and Bass Basins each supply about 6% of Victoria’s gas needs.386 Since 2004, production in Victoria’s offshore Otway and Bass basins has risen significantly. Over the next decade, the Victorian basins will increase in production to meet growing demand and reduce supply from the mature Cooper Basin in central Australia.387 The production forecast is illustrated in Figure 10.2. Figure 10.2: Forecast sources of eastern Australia’s natural gas production

388

900 800 700 600 500 400 300

CSG Other Otw ay Cooper Gippsland

200 100 0 2006-07 2009-10 2012-12 2015-16 2018-19 2021-22 2024-25 2027-28 2029-30

All the gas from these basins is injected into pipelines or storage facilities, as Victoria does not export liquid natural gas via LNG carriers. There are two storage facilities for natural gas, Dandenong LNG and the Iona Underground Gas Storage (UGS) facility. Their role is to inject gas into transmission pipelines to meet peak winter demands and to support gas-fired peak power generation.aa Transmission The Victorian transmission network is part of the east coast network that carries gas both within Victoria and between other States. The transmission network is detailed in Figure 10.3.

The Dandenong LNG Facility also provides a truck loading station for LNG tankers.

129

Energy 389

Figure 10.3: Victorian gas transmission network

The most important component of the Victorian gas transmission network is the Principal Transmission System (PTS). The PTS is owned by APA and serves Melbourne, Gippsland, Central and Northern Victoria, Albury, the Murray Valley region, Geelong and extends to Port Campbell. The PTS is operated by AEMO. Distribution Victoria has three gas distributors. Their details are listed in Table 10.2. Table 10.2: Gas distributors Company Multinet

390

Operational area Melbourneâ&#x20AC;&#x2122;s eastern and

Meters

Mains

(units)

(km)

657,100

9,585

535,328

9,603

Owner DUET Group 79.9%; BBI 20.1%

south-eastern suburbs Envestra (Stratus)

Melbourne, north-east and central Victoria, and Alburyâ&#x20AC;&#x201D; Wodonga region

SP AusNet (Westar)

Western Victoria

Envestra (APA Group 30.6%, Cheung Kong Infrastructure 18.5%)

551,097

9,284

SP AusNet (listed company: Singapore Power International 51%)

Their geographic area of operation is illustrated in Figure 10.4

130

Gas Figure 10.4: Areas of operation of Victoriaâ&#x20AC;&#x2122;s gas distributors

391

Retail Victoria has 13 energy retailers with eight active in the residential and small business market.392 The market share is seen in Table 10.3. Table 10.3: The market share of Victoriaâ&#x20AC;&#x2122;s gas retail sector by retailer during 2008/09 Retailer

10.2.2

Domestic customers

393

Business customers

AGL Energy

27%

25%

Origin Energy

30%

27%

TRUenergy

24%

41%

Other

19%

Policy and governance There have been considerable changes to the governance of the Victorian gas sector over the last two decades, with the most recent changes being to the regulatory regime in 2008. Twenty-five years ago, there was one supplier (Exxon Mobil BHP), one buyer (Gas & Fuel Corporation) and no market. Today there are six suppliers, three major buyers (retailers) and a wholesale spot market, plus long-term supply contracts. The Victorian Government sees that gas will play a greater role in the Stateâ&#x20AC;&#x2122;s energy mix, but its contribution will be constrained by its scarcity relative to coal.394 Key documents to guide the development of gas networks are summarised in Table 10.4.

131

Energy Table 10.4: Key gas planning documents Document

Description

Vision 2030 Update

Vision 2030 Update provides a 25-year vision for Victoria’s gas and electricity transmission networks. It identifies development paths for each of the major energy transmission corridors, and identifies transmission augmentation projects.

Victorian Annual

VAPR is published year by AEMO. It provides a five- and ten-year outlook which allows

Planning Report

stakeholders to make decisions relating to planning pipeline or production facilities and formulating

(VAPR)

market strategies. It includes peak day and annual gas supply and storage forecasts; peak day forecasts of the transmission system’s capacity to deliver gas supplies, including the demandsupply-capacity outlook for the next five years; a long-term network development outlook considering future system constraints; and monthly demand forecasts and a monthly demandsupply outlook for the next twelve months.

395

National Gas

NGSOO will be an annual document produced by AEMO designed to assist gas stakeholders at

Statement of

the national level in developing capital investment plans. The first edition is due out in late 2009.

Opportunities (NGSOO)

The National Gas Law (NGL) and National Gas Rules (NGR), which took effect on 1 July 2008 provide the overarching regulatory framework for gas transmission pipelines in Victoria and all States except Western Australia. These replace the Gas Pipeline Access Law and National Gas Code that provided the regulatory framework from 1997 to June 2008. The NGL governs third party access to natural gas pipeline services and some broader elements of natural gas markets. The NGR cover operation of the National Gas Market Bulletin Board396 that publishes pipeline capacity, forecast demand and market information, and the future operation of the Short Term Trading Market which sets a daily wholesale price for natural gas.397 In Victoria, the following are covered by the NGL: Transmission: Principal Transmission System and VicHub Distribution: Networks owned by Multinet, Envestra and SP AusNet. Pipelines that are not covered by the NGL are subject only to the general anti-competitive provisions of the Trade Practices Act 1974. Access to non-covered pipelines is a matter for the access provider and an access seeker to negotiate, without regulatory assistance.398 Key multi-jurisdictional bodies and government agencies are: Australian Energy Markets Operator (AEMO). The AEMO took over responsibility from VENCorp as the independent system operator of gas networks in Victoria and all other States (except Western Australia) from 1 July 2009. Australian Energy Market Commission (AEMC). The AEMC became responsible for rulemaking, market development and policy advice concerning access to natural gas pipelines services and elements of the broader natural gas markets from 1 July 2009. Australian Energy Regulator (AER). The AER is the economic regulator for National Gas Law covering natural gas transmission and distribution pipelines in all States and Territories (except WA) and enforces the National Gas Law and National Gas Rules. Energy and Water Ombudsman. The Ombudsman handles complaints against gas and electricity companies. Energy Safe Victoria (ESV). The ESV is the safety regulator responsible for gas and pipeline safety in Victoria, excluding safety relating to the production of gas. It regulates the safety and technical compliance of gas supply, installations, appliances and pipelines, and raises awareness of safety. Essential Services Commission (ESC). The ESC monitors the gas retail sector’s compliance, performance monitoring and reporting and complaints.399 Department of Primary Industries, Earth Resources Division (ERD). The ERD, formerly the Minerals and Petroleum Division, administers the construction of gas transmission pipelines, facilitates investment, and manages and plans for gas supply emergencies. 132

Gas

Sector trends Growing gas consumption In Victoria, the two main consumer groups of natural gas are manufacturing/construction and residential. Victoria has the highest residential demand for gas in Australia due to the widespread use of natural gas for cooking and heating.400 Residential demand accounts for around one-third of the Stateâ&#x20AC;&#x2122;s total consumption. Figure 10.5 compares consumption by consumer groups for all Australian jurisdictions. Figure 10.5: Primary natural gas consumption by industry

401

Petajoules 180 Manufacturing and construction

160

Electricity, gas and water

140

Residential 120

Commercial

100

Mining, agriculture and transport

80 60 40 20 0 NSW/ACT

Qld

Vic

Victoriaâ&#x20AC;&#x2122;s gas demand varies by season and hour. Demand is highest in the winter peak period (May to September), which accounted for 57% of the total yearly demand in 2007.402 The hourly variation is shown in Figure 10.6. 403

Figure 10.6: Peak day/typical hourly system demand profile comparison (TJ/hr)

90 80 70 60 TJ/hr

Peak day system demand +GPG

50 40 Peak day system demand

30 20 10

Typical day system demand 4a m

2a m

12 pm

10 pm

8p m

6p m

4p m

2p m

12 am

10 am

8a m

0 6a m

10.2.3

Increasing gas prices Natural gas prices in Australia are low in comparison with other countries, and are lowest in Victoria compared with other States.404 The reasons for the lower prices in Victoria include the high level of local supply availability, low exports via pipelines, lack of LNG of Victorian gas and low transportation costs. While gas prices for retail customers are known, the prices paid by industrial and large commercial customers are generally not known. This is because these customers sign confidential long-term

133

Energy take or pay contracts, which can last for up to 30 years, but now more commonly last for 10 to15 years. Figure 10.7 charts the retail gas price between 1996/97 and 2008/09 for Australian States. Figure 10.7: Retail gas prices for Australian jurisdictions

405

40 35

$ per gigajoule

NSW

Vic

Qld

SA WA

ACT

5 0 2008/09

2007/08

2006/07

2005/06

2004/05

2003/04

2002/03

2001/02

2000/01

1999/00

1998/99

1997/98

1996/97

Note: Data after 1998/99 are estimates based on inflating AGA data by the CPI series for gas and other household fuels for the capital city in each state.

Growing gas power generation Natural gas is the energy source for gas power generation (GPG) plants. Victoria has five operating GPG plants, plus one under construction and one under consideration. Details are: The five existing plants have a capacity of 1,800MW and use 21 TJ/hour when in operation Origin Energy is building a $640 million, 550MW gas-fired power plant at Mortlake. Stage 1 of the plant began construction in March 2009 and should become operational in 2011. A decision to proceed with Stage 2, which will expand generation to 1000MW, has not yet been made Santos is considering an $800 million GPG plant at Shaw River in Western Victoria, which would generate 500MW with plans to expand to 1,500MW.406 GPG plants are used to supply intermediate and peaking power in times of high demand. However, they are also used when: Droughts limit the water available for hydroelectric generation and for operating coal-powered plants that use large amounts of water Balancing supply and demand due to exceptional circumstances such as unanticipated generation plant outages. GPG demand varies each year as seen in Figure 10.8. The large increase in 2007 was due to drought-induced hydroelectric and coal-fired generation capacity limitations leading to an increased reliance on GPG to meet demand.407 The reduction in demand in 2003 and 2006 was due to the expansion of the Snowy-Victoria interconnector and the commissioning of Basslink, respectively.408 409

Figure 10.8: Gas power generation demand (PJ/yr) 40 35 30 25 PJ 20 15 10 5 0 2003

134

2004

2005

2006

2007

2008

Gas

In 2007, GPG demand accounted for about 15% of the total gas demand while in 2008, GPG demand accounted for about 9.5%.410 By 2019, GPG demand on the PTS is predicted to increase by 250% on 2009 levels.411 As the peak demand for GPG is on hot days, corresponding with low demand for residential gas, the use of GPG is complementary for both existing gas and electricity infrastructure. The future growth in GPG demand will depend on several factors. These include: Change in relative generation cost between coal and gas once the future price of carbon is known The growth in renewable energy if GPG is paired with variable renewable energy capacity to provide firm dispatchable capacity The construction of dedicated GPG pipelines as the PTS will not have the capacity to meet existing and significantly new GPG requirements Ongoing drought conditions.

10.3

Performance

10.3.1

Transmission For Victoria’s two covered gas transmission pipelines, performance relates to the price and service quality of third parties’ access to the pipelines. As each pipeline is unique due to its size, length, location, operational characteristics, etc, and each access condition is unique, it is not possible to make meaningful comparisons. For non-covered pipelines, performance indicators on their operations are commercially sensitive and are not available. Regulator decisions govern the rate of investment in regulated transmission and distribution networks. Decisions in the last few years have recognised the need to increase investment in maintenance and capital projects. In the transmission sector alone, VENCorp considers that nearly $1.2 billion in investment will be needed by 2030.412 The general quality and safety of transmission networks is likely to improve slowly as asset integrity management (compliance with AS2885.3) is embedded in operations.

10.3.2

Distribution In Victoria, the key reliability measures are: System Average Interruption Duration Index (SAIDI). SAIDI measures the total minutes, on average, that a customer could expect to be without gas over the reporting period. Total SAIDI comprises both planned and unplanned minutes-off-supply. System Average Interruption Frequency Index (SAIFI). SAIFI measures the number of occasions per year when each customer could, on average, expect to experience an interruption. It is calculated as the total number of customer interruptions, divided by the total number of connected customers averaged over the reporting period. Customer Average Interruption Duration Index (CAIDI). CAIDI measures the average time taken for supply to be restored to a customer when an interruption has occurred. It is calculated as the sum of the duration of each customer interruption (in minutes), divided by the total number of customer interruptions (SAIDI divided by SAIFI).413 In assessing the performance of gas distributors, it is necessary to consider multi-year trends rather than single years. This is because gas distribution infrastructure is sensitive to environmental conditions, such as heavy rain entering low pressure pipes, and the renewal program, which

135

Energy increases planned interruptions in the short-term, will reduce them significantly in the medium to long term.414 Reliability is measured in terms of the average frequency and duration of supply interruptions, which can be either planned or unplanned. Planned interruptions occur when a supply is deliberately disconnected to undertake maintenance or construction work. Unplanned interruptions mainly occur because of leakages or damaged pipes requiring immediate repair. Unplanned outages are often caused by third parties damaging pipes, or by water entering low pressure pipes.415 The ECS in its summary of distributor performance in 2008 found that: Victorian customers continued to receive reliable gas supply in 2007 Customers on average would expect unplanned outages once every 83 years Customers would expect one interruption every 43 years 416 There has been a 9% improvement in SAIFI between 2004 and 2007.

A snapshot of one key performance indicator is reproduced in Figure 10.9. It shows considerable variation. Between 2005 and 2007, the following major supply loss incidents occurred: 10 August 2005: Severe cold weather resulted in very high peak demand that could not be met, resulting in a large number of customer interruptions. 17-18 July 2007: Severe heavy rainfall and low temperatures resulted in high demand, resulting in a loss of supply to a large number of customers, mainly due to demand exceeding network capacity in fringe areas in the distribution network. Water ingression in the network was also a factor that had contributed to the loss of supply in this event.417 Figure 10.9: Average number of interruptions per customer (SAIFI)

418

Network integrity can be measured by the quantity of leaks (loss of containment), third party damage and unaccounted gas. Their levels generally reflect the distributors’ level of operational and maintenance activities. The ESC monitors these issues and in a 2008 report they stated that ‘since 2004, the incidence of gas leaks, damage to gas mains and damage to customers’ service connections has remained relatively unchanged or has improved’.419 Reasons for this include more active enforcement of regulations, industry consultation and advertising of the ‘Dial Before You Dig’ service.420 Figure 10.10 summarises the total number of leaks repaired per kilometre of pipe, and the average number of unrepaired leaks per month per kilometre of pipe for each distributor network. 136

Gas Unrepaired leaks are those that are considered very minor gas leaks in low risk areas, and consequently are re-inspected every 12 months. The figure shows that since 2003, the total number of reported leaks per kilometre has continued to reduce and is now 11% less than in 2004. Per kilometre, the number repaired has reduced by 1.9% and the number left unrepaired reduced by 2%.421 Figure 10.10: Repaired and unrepaired leaks, measured per km and per month respectively.

422

An indicator of network integrity is renewals of aged assets. A significant component of Victoriaâ&#x20AC;&#x2122;s distribution networks is low pressure cast iron pipes. These have a propensity to crack, particularly in reactive clay (soil that shrinks and swells with changes in moisture content), and suffer from water ingress leading to customer interruptions. The distributors and ESC developed a yearly replacement target for the period 2003-07. Both Envestra and Multinet achieved their targets. SPI was short of its target by 60km and this was due to spending more on capital to take account of customer growth and consequently focusing the renewal program on the worst-performing mains of their network.423 The targets for the renewal program for the current regulatory period are listed in Table 10.5. Table 10.5: Length (km) of pipe replacement, 2008-2012. Distributor SPI

2008

2009

2010

424

2011

2012

Total

450

Multinet

108

111

112

114

557

Envestra

100

110

120

150

570

The assessment of distributorsâ&#x20AC;&#x2122; customer service can be made by reviewing their payments to consumers following failures to meet Guaranteed Service Levels (GSL). These standards relate to appointment punctuality, connection speed, repeat unplanned interruptions and lengthy interruptions. The payments between 2004 and 2007 are illustrated in Figure 10.11. While there was variation between each distributor, because of the relatively small number of GSL payment variations it is not possible to detect any significant trends. In 2007, the total GSL payments made by Envestra were $19,940. Multinet was $9,540 and SPI was $13,560.425

137

Energy Figure 10.11: Total number of GSL payments made by distributors, 2004–07

426

500 Total number of payments

450 400 350 300

All DBs

250

Envestra

200

SPI

150

Multinet

100 50 0 2003

10.3.3

2004

2005

2006

2007

Environmental sustainability Gas companies actively promote the environmental benefits of natural gas compared with coal. Coal used in producing electricity generates 80% more carbon dioxide emissions than natural gas. This is being used as a marketing tool to encourage gas domestic space and water heating. Gas companies have also sought to minimise the risks of their operations, and in particular reducing their environmental risk. Examples of this for distributors include: Minimising ground disturbance by using common trenching with other utilities, and directional boring to prevent damage to the root systems of trees Using long-life materials to minimise the need for future maintenance activities Minimising line purging operations and if necessary, using flaring to minimise the environmental impact.

10.4

Future challenges The challenges to achieving improvements in gas infrastructure are: Meeting long-term demand: In the short term, growth in gas demand in Victoria is likely to grow by up to 0.8% per annum (excluding non PTS provided GPG gas) for the next decade.427 Consequently, the existing and planned gas infrastructure is likely to be sufficient to meet demand except in very exceptional circumstances. This assessment is reflected in VENCorp’s 2008 view that no additional supply will be needed in the 2008-2012 period.428 Confidence in this assessment is provided by the knowledge that constraints on the PTS are well known, as are the solutions.429 Exceptional circumstances will typically be extreme cold weather coupled with heavy rain resulting in water ingress into the low pressure distribution networks, and high GPG demand. However, the use of gas storage facilities and linepacks will significantly moderate any demand spike. Generally, in the short to medium term, Victoria is unlikely to suffer the supply and demand imbalances experienced recently in WA, as Victoria does not have an export LNG market, or rapidly growing gas consumers such as in the mining and refining sectors. The stable nature of the Victorian market means that prices are also likely to be less volatile than in WA and rise more slowly. The rapid growth in coal seam gas reserves in Queensland is also likely to reduce gas demand from Victoria, again keeping prices stable. Ensuring sufficient capacity over the long-term is more uncertain due to the challenges in predicting future demand over: The impact of the future price of carbon and RET. If the consequence of these policy decisions results in increased the demand for GPG, the existing PTS will not be able to meet large GPG gas demand growth. Consequently, dedicated pipelines are likely to be built. The growth in GPG is likely to accelerate faster if it becomes common for wind power to be paired with GPG plants to provide firm dispatchable power.

138

Gas The frequency of droughts and heatwaves. Extreme weather events and climate change will result in increased GPG plant usage as hydropower and coal power stations are unable to operate at full capacity. The development of LNG export markets. The development of an export market will increase demand and reduce the reserves more quickly than anticipated, which will have a significant impact on price over time. Implementing demand management: Demand management has a role to play in reducing demand peaks but there is no evidence that it is being considered to the degree that it is in the electricity sector.

10.5

Report Card Rating Infrastructure type

Victoria 2010

Victoria 2005

National 2005

National 2001

Gas

C+

Based on considerations of planning, funding, and infrastructure capacity and condition, Victoria’s gas infrastructure has been rated C. This rating recognises that improvements are being made to the operation of the gas market and the quality of gas planning information. However, asset quality has not significantly improved and the Principal Transmission System remains vulnerable to single points of failure. Significant expansion in gas-fired generation will require additional investment in gas transmission pipelines. Positives that have contributed to the rating are: Development of a national gas market Developments in short-term market trading mechanisms Improvements in investment planning due to the release of the National Gas Statement Of Opportunities Ongoing replacement of aged pipelines Continued exploration and exploitation of gas reserves. Negatives that have contributed to the rating are: Supply vulnerabilities remain due to the single pipelines of the PTS and having just two southern gas injection points Uncertainty about the viability duration of Victoria’s gas basins.

139

Energy

140

TE ELECO OMM MUN NICA ATIO ONS S 11.1

Summarry Infrastrructure type

Victoria a 2010

Victoria 2005

Nation nal 2005

National 2001

Telecom mmunications

Not rated

In 2007, En ngineers Ausstralia rated telecommun t ications in th he Telecomm munications In nfrastructure e Report Carrd 2007. It ussed Local Go overnment Statistical Divisions as the e geographic basis for ratting fixed and mobile m infrasttructure, and d it did not ratte the infrasttructure State e-wide nor ra ate backhaul infrastructu ure. Below arre its ratings.. It is not pos ssible to com mpare its ratin ng with the one in this chapter due e to their diffferent rating methodologiies. Statistica al Division Nam me

Fixed Infrastructure I

Mobile Infrrastructure

Rank kings (2007)

Ranking gs (2007)

Melbourne

B Barwon

Wesstern District

Centrral Highlands

W Wimmera

Mallee

L Loddon

G Goulburn

Ove ens–Murray

Eastt Gippsland

G Gippsland

This rating recognises that t telecommunications have becom me an essenttial service fo or business and a the commu unity, and wh hile voice and d mobile pho one services are almost u universally av vailable, this is not the casse for fast, afffordable broadband acro oss the State e. Specificallyy, there is un nder-provision of fixed bro oadband infra astructure at exchanges in Melbourne e and acrosss Victoria, as well as unde erprovision of o backhaul fibre in region nal Victoria. Overall, O there e is a lack off an integrate ed strategic plan for tele ecommunica ations. Developme ents since the 2007 Teleccommunicatiions Infrastru ucture Reporrt Card have included: Increase ed demand for f high spee ed broadband d services Continu ual growth in mobile phon ne ownership p Increase ed competitio on in the pro ovision of tele ecommunication servicess Increase ed capabilityy of mobile te elephone nettworks includ ding increase es in coverag ge, reliability, function n and capacitty. Major in-prrogress infrasstructure pro ojects include e: The Aus stralian gove ernment’s national broadb band networrk project The Vic ctorian Goverrnment’s VicFibreLINKS regional broa adband initia ative.

1 141

Telecommunications Challenges to improving telecommunications infrastructure include: Creating a value proposition for ubiquitous high speed broadband Accessing investment in the global financial crisis Meeting rising telecommunication demand Balancing market driven telecommunication developments and government intervention to create a competitive telecommunication industry that delivers affordable and widespread access Selecting optimal technologies Addressing the lack of clarity in regulation and access arrangements.

11.2

Infrastructure overview

11.2.1

System description Victoria’s telecommunications infrastructure consists of fixed infrastructure related to customer access networks (CAN) and backhaul transmission networks. The key elements rated in this section are: Fixed line CAN infrastructure Mobile CAN infrastructure Backhaul infrastructure. The provision of telecommunications services operates within a market structure comprising: Carriers: The owner of a network used to supply carriage services to the public Carriage service providers. The organisations that use a carrier service to supply telecommunications services to the public using carrier-owned networks; internet service providers (ISPs) are carriage service providers Content service providers. The organisations that supply broadcasting and on-line services to the public. This section does not address satellite telecommunication infrastructure, government radio networks, fixed wireless broadband or content service providers. Private telecommunication systems that have no impact on public telecommunications are also not considered. Table 11.1 lists the infrastructure that this section assesses. Table 11.1: Infrastructure assessed in the Report Card

430

Type

Purpose

Technologies

Customer Access

Connects customer to an aggregation

Copper twisted pairs

Network (CAN)

point

DSL Access Multiplexers (using twisted pairs,

Fixed line

possibly in the form of ULL or LSS)

Mobile

Coaxial access part of hybrid fibre-coaxial (cable TV) systems Access fibre networks (fibre to the premises/home) Cellular 2G, 2.5G and 3G mobile networks

Back haul

Connects aggregation points to major

Transmission fibre

nodes in capital cities or regional

Fibre trunks

centres, and provides high-capacity links

Microwave links

between capital cities, or from regional

Satellite links

centres to capital cities

Fixed line CAN infrastructure The fixed line CAN represents the link between the telephone exchange and the customer. Fixed line infrastructure includes twisted pair copper wire, broadband cable and fibre to the

142

Telecommunications home/premises, and it provides telephony, data transfer and internet connections. Copper wire is the standard medium for connecting fixed line services to end-user premises. The largest fixed line CAN in Victoria is Telstra. Other fixed line service providers are AAPT (including PowerTel), Neighbourhood Cable, Optus, Primus and SP Telemedia. Mobile CAN infrastructure Mobile CAN infrastructure provides mobile telephone, data and multimedia services to mobile handsets. There are three mobile carriers operating six mobile networks in Victoria. These networks use either 2G/2.5G (henceforth known as GSM) or 3G services. From an infrastructure perspective, there are really only four discrete networks as GSM and 3G share substantial common network systems. The networks are owned by Telstra, Optus, Vodafone and Hutchison. GSM networks are operated by: Telstra Optus Vodafone.

3G networks in Victoria are operated by: Telstra’s Next G™ Network Hutchinson ‘3’ (Hutchinson/Telstra network) Optus/Vodafone (shared network). In June 2009, Vodafone and Hutchison 3G Australia merged to form Vodafone Hutchison Australia. Although these companies now operate as a single entity, as of November 2009 they are yet to announce any plans to merge the ‘Vodafone’ and ‘3’ networks or offer roaming between them. The GSM networks were primarily designed for voice services but are capable of supporting data services at a lower rate than 3G networks. The 3G network allows much higher data transfer rates than the GSM networks, allowing consumers to access a wider range of applications. The 3G technology allows carriers to offer a wider range of service to consumers and achieve a more efficient use of spectrum that allows for greater network capacity. 3G networks provide access to data and the internet through either a mobile handset or a data card that is inserted into a computer. The 3G networks can provide peak download speeds of up to 14.4 Mbps and upload speeds of up to 1.9 Mbps.431 However, it should be noted that mobile broadband capacity is typically shared amongst multiple simultaneous users and is therefore subject to contention. The growth in mobile phones has been substantial over the last decade as seen in Figure 11.1 which shows that the number of mobile phones exceeded fixed-line phones from 2000.

143

Telecommunications 432

Figure 11.1: Take-up of fixed-line and mobile phones (Australia-wide)

Millions of services

15 Mobile phone Fixed-line phone

0 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 200700 01 02 03 04 05 06 07 08

While the primary use of mobile phones and other devices is voice, increasingly, non-voice services are providing a greater share of total revenue. The main uses of mobile phones are: Short Message Service (SMS) and Multimedia Message Service (MMS) Email Web browsing and other data services Personal aids include personal digital assistants (PDAs), GPS-enabled navigation and USB drives Mobile TV and video streaming 433 Mobile commerce, interactive services and location-based services. The growth in mobile broadband speed is significant and likely to accelerate the update of mobile phones for applications that require large amounts of data in near real-time. It is expected that by 2012, mobile networks will be capable of speeds of 100 Mbits434 given sufficient bandwidth allocation. Backhaul infrastructure Backhaul infrastructure connects telecommunication aggregation points to major nodes in capital cities or regional centres, and provides high-capacity links between capital cities, or from regional centres to capital cities. Backhaul is provided by fibre or microwave technologies, and while fibrebased infrastructure provides the highest bandwidth, construction is more capital intensive. Business headquarters Melbourne is the location of a number of nationally significant telecommunications organisations. These include the headquarters of Telstra and its principal operations centre in Melbourne, other carriers, service providers and major vendors such as Ericsson and NEC. These have resulted in making Melbourne a major telecommunications knowledge centre.

11.2.2

144

Policy and governance The Australian and Victorian Governments’ strategic vision for telecommunications are very similar. The vision reflects that while telecommunication can be an enormous contributor to economy, lifestyle, health and safety, telecommunication provision and innovation is primarily driven by market forces. Consequently, governments consider that their major role is to encourage the uptake of telecommunications and the development of telecommunication goods and services. The key to achieving this is a supportive regulatory framework and selective intervention when markets fail to deliver competition or appropriate services.

Telecommunications Both governments seek to increase broadband provision in underserved regions. In July 2009, the Australian Government released its Australia’s Digital Economy: Future Directions paper which aims to develop the digital economy. The Victorian Governments policy blueprint to achieve this is the 2005 strategy document Broadband Framework – Pathways to the future. The Broadband Framework defines how the Victorian Government will meet its broadband requirements in a strategic manner that also facilitates the delivery of telecommunications infrastructure, greater take-up of broadband services, increased competition in the broadband market and lower prices for households and businesses. The policy focus is on providing access to broadband in non-metropolitan areas as the distance, geography and low customer density of rural Victoria has proven to be an impediment to commercial investment in telecommunication infrastructure. The Victorian Government is also intent on developing the ICT sector. Its key documents are the ICT Industry Plan 2005-2010 (2005) and Progress Report 2005-2010 (2009) which identify what the Government has achieved in Victoria’s ICT sector and what support it plans to provide in 2010. Australia’s telecommunications industry is subject to a regulatory framework defined by the Telecommunications Act 1997. Its cores aim is to promote the long-term interests of end-users of telecommunications services. The framework relies on industry self-regulation to develop codes and standards in all areas which apply to the sector. However, Government regulators have powers to intervene if industry selfregulation is not working effectively in specific instances. The key types of framework documents developed under self-regulation are: Industry Codes, which are rules or guidelines governing particular aspects of telecommunications, developed by industry Industry Standards, which are rules or guidelines similar to industry codes, but determined by the ACMA Technical Standards, which cover the technical parameters of customer equipment, such as cables and networks.435 Two other key elements of the regulatory framework are the: Telecommunications (Consumer Protections and Service Standards) Act 1999 which legislates a number of consumer protection matters, particularly the Universal Service Regime, the National Relay Service, and continued access to untimed local calls Trade Practices Act 1974, which includes two telecommunications specific parts, Parts XIB and XIC, that cover anti-competitive conduct provisions and a telecommunications-specific access regime respectively.bb The radio spectrum framework is defined in the Radiocommunications Act 1992 that sets out the tools to manage the spectrum including frequency planning, licensing and technical standards.cc

The access rules under this legislation provide a framework for determining the services to which content service providers have a right to access for the purpose of providing their own competing services, and the cost at which such services will be provided to them. cc The Act specifies three types of transmitting licences: A: Apparatus licences which are usually site-based and specify the category of service, e.g., fixed or mobile, and the technical characteristics including the location, power, frequency of operation and the radiofrequency emission type. B: Spectrum licences which are area-based licences, are intended to be technology and service neutral to the extent possible to give maximum flexibility to the licensee. Once allocated, these spectrum assets are fully tradeable, and can be sub-divided or amalgamated in either the geographic or the frequency band domain. This allows licensees to acquire, through participation in auctions or through trading in the secondary market, whatever spectrum space is necessary to deploy the type of service required. C: Class licences are umbrella licences designed to provide ‘public parks’ for the authorised use of various low powered devices that have a low interference potential. Common examples of these devices are garage door openers, remote car door locks and intruder alarms, wireless microphones, automatic tollway systems and tag security systems.

145

Telecommunications In September 2009, the Australian Government announced that it would be seeking major telecommunication reforms as the existing telecommunications anti-competitive conduct and access regimes are cumbersome, open to gaming and abuse, and provide insufficient certainty for investment. The proposed reforms involve: A structural separation of Telstra that primarily involves separating the network operations/wholesale functions from the retail functions Streamlining the competition regime to provide more certain and quicker outcomes for telecommunications companies Strengthening consumer safeguards, notably the Universal Service obligation, Customer Service Guarantee and Priority Assistance 436 Removing redundant and inefficient regulatory red tape. The Commonwealth Telecommunications Act 1997 exempts low-impact and certain other telecommunications facilities from most planning requirements under State legislation.437 However, for other facilities, State and Local Government planning schemes apply. To facilitate the efficient development of telecommunications infrastructure, the Victorian Government in 1999 introduced the Code of Practice for Telecommunication Facilities in Victoria, which was updated in 2004. This code is an incorporated document in all planning schemes in Victoria. It was the first such code in Australia. The Code sets out the circumstances where a telecommunications facility requires a planning permit and how such a planning decision should be made. It also sets out under what conditions a telecommunications facility does not need a planning permit. The Code has four principles that must be applied where relevant to the design, siting, construction and operation of any telecommunications facility that is not exempt under Australian Government legislation. A telecommunications facility should be sited to minimise visual impact Telecommunications facilities should be co-located wherever practical Health standards for exposure to electromagnetic emissions will be met Disturbance and risk relating to siting and construction should be minimised. Construction activity and site location should comply with State environment protection policies and best practice environmental management guidelines438 Key multi-jurisdictional bodies and government agencies are: Australian Government, Department of Broadband, Communications and the Digital Economy (DBCDE): The DBCDE has a leading role in outlining the strategic direction of the telecommunications sector, and providing advice on all regulatory policy aspects of the telecommunications and radiocommunications sectors. Its Telecommunications Industry Division also provides advice on legislative and administrative arrangements for Telstra and Australia Post. Australian Communications and Media Authority (ACMA): The ACMA is a regulator of the Australian communications industry, with specific responsibilities for the regulation of broadcasting, the Internet, radiocommunications and telecommunications consumer and technical matters. Australian Competition and Consumer Commission (ACCC): The ACCC regulates competition in the telecommunications industry with specific responsibilities for the administration of the regulation of anti-competitive conduct, and the approval and arbitration of access codes developed by the industry. Telecommunications Industry Ombudsman (TIO): The TIO provides an independent dispute resolution forum for complaints made by residential and small business consumers of telecommunications services. The TIO is funded through charges levied on carriers and service providers on the basis of complaints received against them. Communications Alliance Ltd: The Communications Alliance is the peak communications industry body and has primary responsibility for developing technical, operational and consumer industry codes and standards for the industry.439

146

Teleco ommunicatio ons Victoria an Governm ment, Departtment of Innovation, Ind dustry and R Regional De evelopment (DIIRD): DIIRD is th he agency ressponsible forr economic and a regional developmen nt with a particula ar focus in in nnovative tecchnology. Part of DIIRD iss Multimedia a Victoria (M MMV). The core c responssibilities of Multimedia Vicctoria are gro owing the infformation and d communications technolo ogy (ICT) ind dustry in Victtoria and imp plementing a strategic ap pproach to brroadband telecom mmunicationss. Departm ment of Sus stainability and a Environ nment (DSE)): DSE publisshes the Victtorian code of o practice e for telecommunication facilities. f

Sector tren nds Growth in broadband d uptake Broadband d is a class off data transm mission techn nologies, including optic-ffibre (FTTx), xDSL (such h as 440 ADSL, ADS SL2+ and VD DSL), HCF ca able and wireless (such as a WiMax, H HSDPA and LTE). L Broadband d speed is co ontinuing to in ncrease with the faster sp peeds being delivered by y fixed line followed byy wireless ne etworks. Figure 11.2 2 illustrates the speed comparisons fo or different broadband b technologies. Figure 11.2: Digital D data sp peed compariso on

441

100

Digital Data Speed Mbps

90 NBN Fibre o 90% of connection to Australia

80 70 60 50 40

N NBN wireless an nd satellite connection n to 1 10% of Australia a

30 20

Digital Data Service Obligatiion

ADS SL2+ DSL2 AD

Broadband Technolgies T

The combin nation of incrreased speed and increa ased demand d has resulte ed in continua al growth in broadband connectionss. Figure 11.3 3 displays bo oth Victoria’ss and Australlia’s take-up of ISP subscriptions. Figure 11.3: Total ISP subs scriptions

442

9,000 Total ISP Subscriptions ('000)

11.2.3

8,000 7,000 6,000 5,000

Aus stralia

4,000

Vic

3,000 2,000 1,000 0 Jun-09

Mar-09

Dec-08

Sep 08 Sep-08

Jun-08

Mar-08

Dec 07 Dec-07

Sep-07

Jun-07

Mar-07

Dec-06

Sep-06

Jun-06

1 147

Telecommunications The percentage of connections using different broadband technologies is shown in Figure 11.4. Figure 11.4: Type of broadband connection

443

Don't know , 12% Wireless, 12% Satellite, 1% Cable, 19%

DSL/ADSL, 56%

The past growth in broadband is expected to continue as illustrated in Figure 11.5. The availability of reasonably priced fourth generation (4G) cellular and wireless telecommunication technology and the rollout of the NBN will accelerate this. Figure 11.5: Forecast Internet and broadband take-up

444

100 90 80

Percentage Rate

70 60 50

Internet Broadband

40 30 20 10

20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15

Rollout of Government broadband infrastructure In response to the increasing demand for high-speed broadband services, and need to provide broadband services in regional and other areas with limited access, governments have initiated a number of projects to develop broadband networks. National Broadband Network In early 2009, the Australian Government announced that it would be building the National Broadband Network (NBN). The NBN aims to connect 90% of Australian homes, schools and workplaces with 100Mbps broadband services through fibre FTTH and FTTB connections. The remaining 10% will be provided with 12Mbps wireless and satellite broadband services. The network will be built and operated by a new company specifically established by the Australian Government for the project. Investment in the company will, according to preliminary estimates, total up to $43 billion over eight years. Funding for the company will come primarily from the Australian Government through the Building Australia Fund, which will be the majority shareholder. The Australian Government expects private sector investment in the company through the Australian Government issuance of Aussie Infrastructure Bonds (AIBs). The Australian

148

Telecommunications Government intends to sell its interest in the company after the network is built and fully operational. The Australian Government claims that the NBN will lead to a significant reform in the telecommunication industry as it will create a complete separation between the infrastructure provider and the retail service providers. This separation is expected to lead to greater retail competition and lower prices. Rollout of the network in Victoria is expected to commence in 2010, simultaneously in metropolitan, regional, and rural areas. Fibre in Greenfield Estates The Australian Government has announced that all greenfield estates that receive planning approval after 1 July 2010 will require fibre-to-the-premises infrastructure. This initiative is designed to ensure that homes built in new developments or major redevelopments are connected via fibre infrastructure. In December 2009, the Australian Government released an exposure draft of a bill to implement the changes.445 Backhaul Blackspots Initiative To immediately enhance broadband access in regional Australia, the Australian Government announced in April 2009 the Backhaul Blackspots Initiative. This program provides $250 million to be used to immediately address ‘backbone blackspots’ in regional Australia. In June 2009, the Australian Government announced that South West Gippsland has been named as one of six initial locations in the first round of the program. It was the only Victorian location to be funded. The contract for the initiative was awarded to Leighton Holdings owned Nextgen Networks in December 2009 and was announced as part of the first building blocks of the National Broadband Network.446 Victorian Government initiatives The Victorian Government has a number of initiatives that have the policy objectives of: Achieving better broadband services for users in significant and underserved regional markets Improving regional government organisations’ needs for high capacity telecommunications services.447 One initiative is the TAFE Broadband Program. This $20 million program, announced in August 2008, will provide high capacity broadband connectivity (one gigabit per second fibre cable) to the head office of 14 TAFE institutes across Victoria. It will also provide for greater connectivity to the within-institute campus network. The main initiative is the VicFibreLINKS (VFL) Program. This $20 million program, announced in August 2008, involves the deployment of competitive open access fibre backhaul infrastructure in regional Victoria with two priority routes, Bendigo to Mildura and Geelong to Warrnambool. Eight other routes are being examined. These routes were selected as they are currently serviced by only a single fibre backhaul infrastructure provider and were believed to have a lack of competitive supply of services such as mobile broadband and fixed line broadband. They also have significant unmet demand. The objective of the VFL is to introduce a competitive backhaul capability into the region with the aim that it will generate innovation from competitors.448 See Figure 11.6.

149

Telecommunications Figure 11.6: The locations and extent of the VicFibreLINKS project

449

The Victorian Government has asked the Australian Government to fund the VFL Extensions Program, valued at $57.4 million, as the State cannot fund this by itself. The program would provide fibre links to cover the additional seven routes, which are: South to West Gippsland Echuca to Wodonga Bellarine Peninsula Mornington Peninsula Warrnambool-Portland-Hamilton loop Seymour loop Benalla loop 450 Wangaratta loop. To facilitate this, the Victorian Government has stated that it will adapt its VFL program and consider providing access to VicTrack’s existing fibre and other telecommunications assets as part of any ‘package’. The government-owned VicTrack has an extensive metropolitan FOC footprint along the urban rail corridors and a regional FOC footprint that extends along the regional fast rail network to Geelong, Ballarat, Bendigo and Traralgon.451 Another set of infrastructure initiatives has been advanced by the Victorian Government as a way of developing areas of excellence in key areas. Examples include: Victorian eResearch Strategic Initiative (VeRSI): VeRSI is a $16 million project that includes investment in grid infrastructures, services and applications, essential to providing researchers with the tools (networks, data stores and grids, portals, applications, demonstration projects, skills and training) that will enable eResearch practices to develop.452 The Victorian Education and Research Network. VERNet links university campuses state-wide via a fibre network. Announced in June 2006, VERNet will eventually connect into 200 locations across Victoria and is already linked to the national Australian Research and Education Network and to global education and research communities in the US, Europe, Asia and South America.453 The Victorian Government’s agency, VicTrack, is a significant niche telecommunication provider operator. VicTrack is primarily involved in managing government assets, primarily rail land and infrastructure, but also owns fibre infrastructure along the four regional fast rail corridors for rail signalling and control purposes, a network of wireless towers to provide radio communications with 150

Telecommunications the trains, and a Network Operations Centre. While it primarily provides telecommunication services for transport operators, it also provides it for government and other groups. In 2008, it began building the intra-Government Secured Network (iGSN) on behalf of the Victorian Government. The iGSN links a number of government central business district (CBD) buildings with the main government remote data centres through secure and protected high bandwidth data channels (1-10 GBps).454 VicTrack also provides backhaul data services to Basslink Telecoms between Traralgon and Melbourne’s CBD.455 Figure 11.7 illustrates VicTrack’s metropolitan fibre network. 456

Figure 11.7: VicTrack’s metropolitan fibre network

Figure 11.8 identifies existing and proposed non-Telstra fibre optic cables. Figure 11.8: Existing and proposed non-Telstra fibre optic cables (FOC)

151

Telecommunications

11.3

Performance

11.3.1

Fixed line CAN infrastructure performance Fixed line telephone provision is universal as it is a requirement for Telstra, under the Australian Government’s universal service obligation (USO), to ensure that standard telephone services are reasonably accessible to all people in Australia on an equitable basis.457 The cost of supplying loss-making services that are required to fulfil the USO is shared among all carriers. ACMA’s surveys identify that the majority of Australians are largely satisfied with their fixed-line service. As seen in Table 11.2, over 80% of people stated that their fixed line phone service met or exceeded their expectations.458 This perception did not appear to differ by the caller’s location or the call’s destination. Table 11.2: Household consumer satisfaction with fixed-line service providers by location Australia-wide, 459

January–June 2008

Local Consumer opinion

Metro

Long distance

Non-metro

Metro

Non-metro

International Metro

Non-metro

Exceeded my expectations

Mostly met my expectations

73%

74%

75%

73%

Sometimes met my

14%

13%

15%

12%

15%

13%

expectations Rarely met my expectations

Figure 11.9. identifies the nature of complaints relating to fixed lines. Figure 11.9: Fixed line complaints Australia-wide, 2008/09 4%

Customer service

20%

460

Billing and payments Faults

Complaint handling Provisioning

Contracts 25% 15%

Credit management Customer transfers

10%

Others

Evaluating the performance of broadband involves assessing the grade and quality of services. This normally involves assessing not only infrastructure issues, such as coverage and capacity, but also market issues such as pricing and packages offered. However, the Report Card focuses on infrastructure issues and while making comment on the existence of multiple broadband infrastructure providers in a market, does not rate the affordability of broadband. The majority of broadband connections are provided by the copper wire fixed lines. About 70% of broadband connections are DSL, and the most common form is asynchronous DSL (ADSL). ADSL uses Telstra’s copper phone network to connect to the home from exchanges.461 In Victoria, DSL is available from 2,757 out of 5,069 exchange service areas, and some 98% of homes and businesses are located in these exchange service areas as of 30 June 2008.462 However, some premises within an exchange service area may not be able to access DSL because they are: Located too far from an exchange as the quality of DSL decreases with distance 152

Teleco ommunicatio ons Â?

Have a technology problem p such h as having a large pair gain g system (LPGS) already on their line which results in no additiona al capacity be eing availablle, not being connected to t a copper 463 phone liine, or sufferring from exte ernal interferrence such as a a tram line e.

A faster version of DSL L is ADSL2+. This service e can provide e download sspeeds of up p to 24 Mbps; however, th he premise tyypically need ds to be within 1.5km of an a exchange e to get spee eds greater th han 12 Mbps.4664 As of Septe ember 2008,, there were 1,403 excha anges enable ed with ADSL L2+, and it iss 46 65 available in n nearly all metropolitan m e exchanges. About 48% % of the popu ulation lives within w 1.5 km m of 466 an ADSL2+ + enabled exxchange. The T Municipa al Association of Victoria states that 70% 7 of the ru ural 467 population has broadba and availability. Figure 11.1 10 shows the e physical AD DSL-capable e exchanges in Victoria. Figure 11.10:: ADSL enabled d exchanges in n Victoria (red signifies ADSL L1 and green A ASDL 2+ excha anges

468

Upgrading of exxchanges is contin nuously occurring and details of the e availability of AD DSL ports in excha anges and by CMU UX are available from fr Telstra Wholesa ale at http://telstra awholesale.com/prroducts/data/adsl--reports-plans.htm m and on ADSl2exxchanges.com.au under the RIM section

Telstra is th he largest prrovider of fixe ed-line broad dband via its DSL enabled exchanges s. Some 92% % of Melbourneâ&#x20AC;&#x2122;s population n has Telstra DSL access s. Several mo ore percent o of the popula ation can access bro oadband via other o provide ers. However, there is still several percent of the population p th hat do not have e access. Th hese are in developed are eas where th he infrastructture cannot support s additional lines, or in ne ew areas where DSL is not n available from the excchange. To in ncrease supply, investmentt by the teleccommunicatio on providers is required, but this will o only occur where w provide ers can make a commercia al return on th he investmen nt. Conseque ently, in deve eloped areas s where the vast majority of demand d is met, add dressing sma all scale blacckspots is nott a priority. Figure 11.1 11 shows the e physical AD DSL-capable e exchanges in Melbourne.

1 153

Te elecommunic cations Figure e 11.11: ADSL enabled e excha anges in Melbo ourne (red signifies ADSL1 an nd green ASDL L 2+ exchanges s

469

Anoth her form of fixed line broa adband services includes s hybrid fibre e coaxial (HF FC) (which arre used by ca able modemss) and FTTx. In March 20 009, Telstra announced a a upgrade to an o its Victorian cable netwo ork which co ould give up to t a million Melbourne M ho omes accesss to ultra-high h-speed broa adband by De ecember. This was announced as part of a $300 million nation nal upgrade to Telstraâ&#x20AC;&#x2122;s HFC H netwo ork. The ave erage speed of o the upgrad ded network will be betw ween 70 and 100Mbps.

11.3.2

astructure performance p e Mobiile CAN infra Figurre 11.12 iden ntifies the num mber and typ pe of compla aint issues fo or mobile pho ones. Of the comp plaints, 13,05 56 of these were w relating to faults in th he mobile ne etwork. With the introducttion of the 3G services, the t level of complaints c ha as fallen sign nificantly. Figure e 11.12: Mobile e complaints is ssued by categ gory, 2008/09 10%

1% % 1%

470 0

Custo omer service

20%

Billing and payments Faults s

16%

Complaint handling Provis sioning Contra acts

1% 26% 14 4%

Creditt management Custo omer transfers

11%

Others

The main m geographic areas of poor covera age performa ance in Victo oria are Eastt Gippsland and a the Victorian Alpine re egion. The Municipal M Asssociation of Victoria V state es that 99% o of the rural population has Ne ext Gâ&#x201E;˘ mob bile phone co overage.471

154

Telecommunications 11.3.3

Backhaul infrastructure Melbourne’s inter-capital transmission infrastructure consists of: Over 10 long-haul fibre systems with POPs with four alternative paths serving the direct routes of Brisbane, Canberra, Sydney, Adelaide, Hobart Over long-haul microwave links. Intra-regional links are strongly associated with whether or not a particular regional city is located on a major inter-capital route. Regional transmission infrastructure is almost entirely a hub-andspoke model with Melbourne at the hub. In some regions of Victoria, backhaul infrastructure consists of only one primary fibre cable line. These can be cut, typically accidentally by a backhoe, which can result in a loss of most telecommunication access for as many hours as the cable is repaired. The other major problem with single fibre links is that there is a lack of competition, resulting in high broadband prices.

11.4

Future challenges The challenges to achieving improvements in infrastructure are: Creating a value proposition for ubiquitous high speed broadband. The NBN aims to provide universal high speed broadband access, and it is claimed that this will deliver significant improvements in business efficiency and innovation, and quality of life improvements. However, while there is no doubt that its higher speed and universal access will be welcome, the cost of it will be significant. Already the vast majority of all businesses have high speed access, as do the majority of urban Australians if they wish to purchase it. A challenge will be in ensuring that the NBN benefits justify their costs. Victorian-specific decisions affecting the NBN include what role that VicFibreLINKS will play in the NBN, and what will be the use of VicTrack’s assets. These decisions will not only shape the final form of the NBN, but also the speed of rollout. Accessing investment in the global financial crisis. Following the global financial crisis, capital availability has not returned to pre-crisis levels. As telecommunication companies are capital intensive, reduced capital availability slows upgrade and expansion plans. Meeting rising telecommunication demand. Congestion in mobile CAN infrastructure may occur in areas of very dense population or during peak demand. This will be managed by increasing the number of cells and microcells, providing that there is sufficient space. The Victorian Government’s Code of Practice for Telecommunication Facilities in Victoria facilitates the rapid installation of new telecommunication facilities. In a few regional areas, access to competitive speed bandwidth services will improve with the completion of the currently under way VicFibreLINKS and Blackspot projects, but significant improvements will depend on the development of the enhanced VicFibreLINKS program and the NBN. Balancing market driven telecommunication developments and government intervention to create a competitive telecommunication industry that delivers affordable and widespread access. Telecommunication infrastructure investment decisions are made by telecommunication providers on the basis of market decisions. Consequently, areas of good financial returns have better telecommunication capabilities than other areas. Areas that are served by a single provider generally experience higher prices and lower quality services than areas with competitive provision. Therefore, for social and economic reasons, improved services are required for under-served areas. This invariably requires some form of government intervention. Certain difficult to access areas of Victoria are not served by fibre and are unlikely to be served by commercial players, thus government subsidy to these areas will be required. Selecting optimal technologies. There are many technologies that telecommunications companies can deploy. All have tradeoffs such as cost, risk, capability and compatibility. The selection of technologies is critical in preventing stranding of assets, particularly for smaller telecommunication companies that do not dominate the market, and for those wishing to be compatible with the NBN.

155

Telecommunications

11.5

Addressing the lack of clarity in regulation and access arrangements. A lack of clarity in regulation and access arrangements has slowed telecommunication companies investing in infrastructure. Consequently, the nature of the Australian Government’s current telecommunication reforms will be critical in providing the certainty required for telecommunication investment.

Report Card Rating Infrastructure type

Victoria 2010

Victoria 2005

National 2005

National 2001

Telecommunications

Not rated

Based on considerations of planning, funding, and infrastructure capacity and condition, Victoria’s telecommunication infrastructure has been rated C. This rating recognises that telecommunications have become an essential service for business and the community, and while voice and mobile phone services are almost universally available, this is not the case for fast, affordable broadband across the State. Specifically, there is under-provision of fixed broadband infrastructure at exchanges in Melbourne and across Victoria, as well as under-provision of backhaul fibre in regional Victoria. Overall, there is a lack of an integrated strategic plan for telecommunications. Positives that have contributed to the rating are: Increased quality of broadband services for the majority of Victorians Multiple backhaul providers on main trunk routes Victorian Government initiatives to provide competitive fibre links to regional Victorian NBN vision to provide fibre to premises or wireless broadband capability for all Australians Evolution of VicTrack as a telecommunications infrastructure provider. Negatives that have contributed to the rating are: Existence of high speed, broadband blackspots in Melbourne and in many regional areas Lack of competition in backhaul links to many parts of regional Victoria, and thus high prices Lack of clarity on converting the NBN vision into reality Lack of use by Victorian Government agencies of dark fibre owned by third parties, as some agencies require their own dedicated fibre network Lack of an overarching integrated telecommunication strategic plan.

156

AP PPE END DICE ES

157

A Appendix x A: Rating me ethodolo ogy The rating r method dology is dessigned to pro ovide a stand dardised app proach to devveloping evid dencebased d rating of infrastructure that is credib ble, defendab ble, and explainable. The Report R Card’s rating sche eme is prediccated on the principle tha at infrastructu ure policy, re egulation, plann ning, provisio on, operation n and mainten nance are op ptimal if the infrastructure e meets the current c and future f needs of the comm munity, econo omy and env vironment in terms t of sustainability, effecttiveness, effiiciency and equity. e The infrastructure e rating princciples are bassed on the view that: 1. Infrastructure needs to be optimised in n a systems context c that requires: r complemen ntarity in natiional, State/T Territory and d local govern nment decisiions ce governance arrangem ments across the infrastru ucture policy,, regulation, planning, best-practic provision, operation o and maintenan nce activities e and efficien nt markets (w which include es infrastructture reflecting g the true co ost of competitive provision, including externality costss and benefits) m set of secto or legislation,, regulation and a standard ds a minimum ucture and re esources (req quires long-te erm focus on n the efficient use of existing infrastru maintenancce, renewalss and demand manageme ent) bility approacch, which givves due rega ard to econom mic, social an nd environme ental a sustainab factors hat is based on o data, evid dence and informed decission-makers working in planning th partnership p with stakeh holders. 2. Infrastructure should be planned, desig gned, built, operated o and d maintained in a sustaina able, co ost-effective, efficient and d equitable manner m over its life-cycle,, which is typ pically 30 to 100 1 ye ears dependiing on the inffrastructure. 3. De ecisions on infrastructure e need to reccognise that it both shape es and is sha aped by the social, s ecconomic and environmen ntal objective es set by the community. 4. Infrastructure decisions sh hould balance e the costs and a benefits on o the econo omy, society and nvironment by b simultaneo ously optimissing the follow wing objectivves: en economic growth, g efficiency and efffectiveness ety and secu urity health, safe d social justicce access and ntal responsibility environmen c a amenityy. and liveability, connectivity 5. Infrastructure should be prrovided by bo oth the public c and private e sectors to o optimise taxp payer an nd infrastructture stakeholder best value. 6. Go overnments and infrastru ucture organisations shou uld have the relevant skillls to effectively ovversee the prrovision of in nfrastructure, whether the e actual infrastructure pollicy, regulatio on, planning, provvision, operattion and maintenance are e done by the public or p private sectorr. 7. Infrastructure decisions sh hould reflect current c and anticipated a c challenges, ssuch as demo ographic sh hifts, ageing, climate change adaptatiion, greenhouse gas mitigation and re esilience. 8. Infrastructure decisions sh hould be acco ountable and d transparentt.

158

Appendix A: Rating methodology Rating scale Ratings given are based on the scale in the table below: Table: Rating scale Letter

Designation

Definition*

Very good

Infrastructure is fit for its current and anticipated future purposes

Good

grade

Minor changes required to enable infrastructure to be fit for its current and anticipated future purposes

Adequate

Major changes required to enable infrastructure to be fit for its current and anticipated future purposes

Poor

Critical changes required to enable infrastructure to be fit for its current and anticipated future purposes

Inadequate

Inadequate for current and anticipated future purposes

* Defined as infrastructure meeting the current and future needs of the community, economy and environment in terms of sustainability, effectiveness, efficiency and equity.

Rating scheme The rating scheme is based on a cascading structure that details, at various levels of granularity, the key elements deemed to be essential to optimal infrastructure policy, regulation, planning, provision, operation and maintenance. The scheme has two high level Categories â&#x20AC;&#x201C; future infrastructure and existing infrastructure. For each of these, there are three Components, which further divide into Element Blocks and finally Foundation Elements. This is illustrated in the figure below.

159

A Appendix x B: Un nits and acrony yms Units s J

Joule, a unit of energ gy

( = 1 joule/se econd), a unit of o power Watt (1W

watt-h hour (1Wh = 360 00J), a unit of electricity e energy y

Volt, a unit of voltage e

Litre, a unit of volume e

Prefix ixes m

-3

milli, meaning m 10

kilo, meaning m 10 (tho ousand)

mega a, meaning 10 (million) (

giga, meaning 10 (biillion)

m 10 (trillion) tera, meaning

peta, meaning 10 (q quadrillion)

Acro onyms

160

ACCC

Austra alian Competitio on and Consum mer Commission n

C AEMC

Austra alian Energy Ma arket Commission

AER

Austra alian Energy Re egulator

AGO

Austra alian Greenhouse Office

ARTC

Austra alian Rail Trackk Corporation

E BITRE

Burea au of Infrastructu ure, Transport and a Regional Ec conomics

BTE

Burea au of Transport Economics

CAIDI

Custo omer Average In nterruption Dura ation Index

CBD

Centrral Business Disstrict

G COAG

Counccil of Australian Governments

CPRS

Carbo on Pollution Red duction Scheme e

DIRN

Define ed Inter-State Rail R Network

DLG DITRD

Department of Infrasttructure, Transp port, Regional Development D an nd Local Govern nment, formally DOTARS

DoI

Department of Infrasttructure

DSE

nvironment Department of Sustainability and En

EPA

onment Protectiion Authority Enviro

ESC

Essen ntial Services Commission

GPG

Gas power p generatio on

IRI

Intern national Roughn ness Index

ITS

Intellig gent Transport Systems

KPI

Key Performance P Ind dicator

LNG

Liquefied Natural Gas

LPG

d Petroleum Gass Liquid

MAIFI

Mome entary Average Interruption Fre equency Index

MAV

Municcipal Association n of Victoria

T MRET

Mandated Renewable Energy Targe et (scheme)

awatts Mega

NEM

Nation nal Electricity Market M

NWC

Nation nal Water Comm mission

NWI

Nation nal Water Initiattive

PTS

Princiipal Transmissio on System (gas)

RET

Renew wable Energy Targets T

Appendix B: Units and acronyms SAIDI

System Average Interruption Duration Index

SAIFI

System Average Interruption Frequency Index

TEU

Twenty-foot Equivalent Unit (container)

UGS

Underground Gas Storage

WSAA

Water Services Association of Australia

161

A Appendix x C: Glo ossary Ro oads Declarred road: Road ds over which VicRoads has reg gulatory authority. Mainte enance: Pavem ment maintenancce can be divide ed into the follow wing classes: routine maintenance m whiich is reactive, addressing a mino or defects. This includes fixing potholes and ro ough patches on o the pavemen nt. periodic maintenance m to resurface and reseal r the pavement to preventt water infiltratin ng the pavemen nt structure, to addresss some aspectss of surface rou ughness and to improve the tracction of the pave ement surface. rehabilita ation which involves a more significant treatme ent to improve th he structural con ndition of the pa avement 472 and bring g the surface ba ack to within an acceptable leve el of roughness and traction. Road infrastructure: Road infrastruccture consists of: o the road pavement—the e structure that carries c traffic other stru uctures—bridge es, pathways, ba arriers, walls roadside assets—including engineering features such as a traffic signs and a guideposts,, cuttings and embankm ments, and environmental featu ures such as veg getated areas situated s within th he boundaries of o the road reserve which regulate speed, warn of hazards h and pro ovide information n roadside traffic signs—w nt markings—de esignating the ed dges of the road d and traffic lanes and providin ng directional an nd warning pavemen 473 informatio on.

Ra ail Above e rail: Those activities required to provide and operate train se ervices such as rolling stock prrovision (i.e. trains, carriages), rolling stock ma aintenance, train n crewing, termiinal provision, frreight handling a and the marketiing and administratiion of the above e services. Below w rail: Those acttivities associate ed with the provvision and mana agement of rail infrastructure, in ncluding the con nstruction, maintenancce and renewal of rail infrastruccture assets, and d the network management m services required for the safe operation off train services on the rail infrasstructure, includ ding train contro ol services and tthe implementattion of safe working pro ocedures. Broad d gauge: The distance of 1,600 0mm (5’3”) betw ween two rails. Narrow w gauge: The distance d of 1,06 67mm (3'6") betw ween two rails. Rail in nfrastructure: Consists C of both h above and below rail infrastructure. Standard gauge: The e distance of 1,4 435mm (4’8½”) between two ra ails.

Po orts Berth:: The wharf space at which a sh hip docks. A wh harf may have tw wo or three bertths, depending o on the length off incoming ships. Break Bulk Cargo: Cargo C that is nott containerised, e.g. timber, pap per, steel, vehiccles, vehicle com mponents. mon-User Faciliity: A port facilitty not dedicated d to a particular use and availab ble for short-term hire. Comm Container terminal: A specialised fa acility where oce ean container ve essels dock to discharge d and lo oad containers. ontainer designed for cargo tra ansport. Most co ontainers are eitther 20 feet (sixx metres) or 40 feet f (twelve Container: A metal co metres) long and referred to t 20 TEU or 40 0 TEU respectively. Dead Weight W Tonnag ge (DWT): Maximum weight off a vessel includ ding the vessel, cargo and balla ast. Pilot: A licensed navigational guide with w thorough kn nowledge of a particular p section n of a waterwayy, whose occupa ation is to steer ships along a coast or o into and out of o a harbour. Loc cal pilots board the ship to advise the captain and on conditions. navigator off local navigatio Steved dores: Labour management m co ompanies that provide p equipme ent and hire worrkers to transferr cargo between n ships and docks. Twentty Foot Equivallent Unit (TEU)): A unit of meassurement equall to the space occcupied by a sta andard twenty foot f container.

162

Appendix C: Glossary

Airports Aeronautical uses: The use of an airport for aviation-related purposes, including aircraft movements and maintenance and any facilities at an airport enabling people to travel. Airport Master Plan: Airport Master Plans are a requirement of the Airport Acts 1996 and are prepared by major Australian airports every five years to provide a clear direction for the growth and development of the airport. Airport Operator: The airport lessee or owner. Curfew: A restriction on flights that can take off or land from specified airports at designated times. General aviation: All civil operations other than Regular Public Transport operations. Leased federal airports: The 21 Australian airports covered by the Airports Act 1996 where the Airport Operators lease the airport land from the Australian Government. Non-aeronautical developments: Non-aviation commercial developments, such as retail outlets and office buildings, on airport sites. Regular Public Transport operation (RPT): An operation of an aircraft for the purposes of an air service that is provided for a fee payable by persons using the service, is conducted in accordance with fixed schedules to or from fixed terminals over specific routes, and is available to the general public on a regular basis (synonymous with â&#x20AC;&#x2DC;scheduled servicesâ&#x20AC;&#x2122;). Remote Aerodrome Safety Program (RASP): A cooperative Commonwealth, State and Territory funding scheme for improving the safety and accessibility of airstrips in remote and isolated communities. Remote Air Service Subsidy (RASS) Scheme: A Commonwealth funded subsidy scheme to provide remote and isolated communities with regular weekly air services.

Water Annual Exceedance Probability (AEP): The statistical likelihood of occurrence of a flood of a given size or larger in any one year, usually expressed as a percentage. Carrier: A conduit for the supply or drainage of water. The key types are lined channel (an earthen channel lined with a low permeability material), unlined channel (an earthen open channel without internal lining), natural waterway (a stream or other naturally-formed watercourse), and pipe (a closed conveyance or carrier regardless of material, size or shape that conveys water, typically for supply service). Catchment Management Authorities (CMAs): Authorities that are responsible for regional and catchment planning and coordination, and waterway, floodplain, salinity and water quality management. Catchment: An area of land where run-off from rainfall goes into one river system. Consumptive use: The use of water for private benefit consumptive purposes including irrigation, industry, urban, stock and domestic use. Effluent: Treated sewage that flows out of a sewage treatment plant. Greywater: Water from the kitchen, laundry and bathroom. It does not include toilet waste. Headworks: Dams, weirs and associated works used for the harvest and supply of water. Indirect Potable Reuse (IPR) water: Recycled water used as a source of potable water, typically by injecting it into a water reservoir. Integrated urban water cycle management: The integrated management of all water sources so that water is used optimally within a catchment resource, in a state and national policy context. This approach promotes coordinated planning, sustainable development and management of the water, land and related resources linked to urban areas, and the application of water sensitive urban design principles. Interconnected water grid: A network of pipes that allows water to be moved across a given region. Irrigation: The artificial application of water to land for the purpose of agricultural production. Potable: Suitable for drinking. Recycled water: Water derived from sewerage systems or industry processes, treated to a standard appropriate for its intended use. Reticulation: The network of pipelines used to take water into areas of consumption; includes residential districts and individual households. Run-off: Precipitation or rainfall that flows from a catchment into streams, lakes, rivers or reservoirs. Sewage: The waste and wastewater discharged into sewers from homes and industry. Sewerage: Infrastructure system for the collection, removal, treatment and disposal of sewage. Stormwater: Rainfall that runs off roofs, roads and other surfaces where it flows into gutters, streams, rivers and creeks or is harvested. Third pipe systems: A reticulated pipe network that distributes recycled water for use in gardens, etc. Trade waste: Industrial and commercial liquid waste discharged into the sewerage system. Urban runoff: Water deposited by storms or other sources that passes through stormwater drains or is harvested. Urban runoff may contain substantial level of pollutants such as solid wastes, petroleum-based compounds, heavy

163

Appendix C: Glossary metals, nutrients, pathogens, sediment, organic chemicals, pesticides, insecticides and other lawn care and cleaning materials. Wastewater: Water that, following capture or use by the community, does not currently have a form of beneficial recycling; includes greywater, sewage and stormwater. Water allocation: The specific volume of water allocated to water access entitlements in a given season, defined according to rules established in the relevant water plan. Water businesses: Organisations charged with supplying water to towns and cities across Victoria for urban, industrial and commercial use. They administer the diversion of water from waterways and the extraction of groundwater. Water Sensitive Urban Design (WSUD). The integration of urban planning with the management, protection and conservation of the urban water cycle, ensuring that urban water management is sensitive to natural hydrological and ecological processes. This involves the integration of water cycle management into urban planning and design so that it minimises the risks to the water bodies that supply water or receive the stormwater or recycled water. Wholesale market: A competitive market where a commodity such as water can be sought from multiple suppliers.

Electricity Blowdown: The process of using water to remove the accumulation of dissolved minerals in the recirculating cooling water of thermal generators. Carbon Pollution Reduction Scheme (CPRS): The CPRS is the Australian Government's emissions trading scheme which has two distinct elements, the cap on carbon pollution and the ability to trade. Contingency events: Events that affect the power system’s operation. Their categories are: credible contingency events, events whose occurrence is considered ‘reasonably possible’ in the circumstances. For example, the unexpected disconnection or unplanned reduction in capacity of one operating generating unit, or the unexpected disconnection of one major item of a transmission plant. non-credible contingency event, events whose occurrence is not considered ‘reasonably possible’ in the circumstances. Typically, a non-credible contingency event involves simultaneous multiple disruptions, such as the failure of several generating units at the same time. Demand-side management (DSM): The planning, implementation and monitoring of utility activities designed to encourage consumers to modify patterns of electricity usage, including the timing and level of electricity demand. Generator – Baseload and peaking: Baseload generators provide the continuous ongoing electricity supply while peaking generators provide supplemental power to meet energy demand peaks. Interconnector: Transmission line/s that connect transmission networks in adjacent regions. Load shedding: Reducing or disconnecting load from the power system either by automatic control systems or under instructions from the AEMO. Reliability of supply: The likelihood of having sufficient capacity (generation or demand-side response) to meet demand. Reliability Standard: The requirement that there is sufficient generation and bulk transmission capacity so that, over the long term, no more than 0.002% of the annual energy of consumers in any region is at risk of not being supplied, i.e. the maximum USE is 0.002%. Unserved energy (USE): The amount of energy that cannot be supplied because there are insufficient supplies (generation) to meet demand.

Gas Coal seam methane (CSM): Methane absorbed into the solid matrix of coal beds, and then extracted. Linepack: Gas maintained in a gas transmission line to maintain pressure but also as a buffer to provide an uninterrupted flow of gas to customers. Liquefied Natural Gas (LNG): Natural gas that has been converted temporarily for ease of storage or transport. LNG takes up about 1/600th the volume of natural gas in the gaseous state. Natural gas: Gaseous fossil fuel consisting primarily of methane but including significant quantities of ethane, butane, propane, carbon dioxide, nitrogen, helium and hydrogen sulphide. Principal Transmission System (PTS): The gas transmission network owned by APA and operated by VENCorp which serves Melbourne, Gippsland, Central and Northern Victoria, Albury, the Murray Valley region, Geelong and extending to Port Campbell. Also known as the Victorian Transmission System (VTS). Unaccounted for gas (UAFG): The difference between metered injected gas supply and metered and allocated gas at delivery points. UAFG comprises gas losses, metering errors, timing, heating value error, allocation error and other factors.

164

Appendix C: Glossary

Telecommunications 2G: Second generation mobile telecommunications, digital mobile service that provides voice communications and a low level of data transmission. 3G: Third generation mobile telecommunications, digital mobile service that provides voice communications, high-speed data transmission and Internet access. Asymmetrical digital subscriber line (ADSL): A technology that converts telephone lines to paths for high-speed data services; enhancements to this technology include ADSL2 and ADSL2+. Backhaul networks: Backhaul transmission networks connect the central point of an access network (such as telephone exchange, HFC hub or mobile tower) to the rest of the network. Backhaul transmission is provided on either optical fibre or microwave. The majority of backhaul transmission networks are provided by Telstra and Optus with other operators including AAPT, Amcom, Ergon, Nextgen, PIPE Networks, Primus, QLD Rail and Soul. While there is competition in backhaul networks between all capitals and within many inter-exchange routes, many regional routes are served by Telstra alone. Bandwidth: The maximum data transmission rate, measured in bits per second (bps) Broadband: ‘Always on’ high data speed connection. Technologies used to deliver broadband include ADSL, HFC, fibreoptic cable, wireless and satellite. Customer Access Network (CAN): The link between the telephone exchange and the consumer. Code division multiple access (CDMA): A digital standard that separates calls from one another by code. Digital subscriber line (DSL): A transmission technology that enables digital data services. DSL describes several technologies including ADSL, ADSL2 and ADSL2+. Fibre-to-the-x (FTTx): A generic term for the configuration of a broadband network that uses optical fibre to replace all or part of the usual metal connection to the consumer. (FTTB) Fibre-to-the-building: fibre reaches the boundary of the building. (FTTH) Fibre-to-the-home: fibre reaches the boundary of the living space. (FTTK) Fibre-to-the-kerb: fibre reaches typically within 300m of the consumer’s premises. (FTTN) Fibre-to-the-node: fibre reaches a street cabinet further typically further than 300m from the consumer’s premises. Global system for mobile communication (GSM): A digital cellular standard operated by Telstra, Optus and Vodafone. Hybrid fibre coaxial cable (HFC): A telecommunication connection that consists of optical fibre on major routes and coaxial cable connections to consumers. Microcell: An antenna and associated box that supplements the mobile network in heavy usage areas. A microcell may minimise the need for a larger facility. Public switched telecommunications network (PSTN): The network of the world's public circuit-switched telephone networks. Speed: Typical speeds are kilobits per second (kbps) and Mbps (Megabits per second). Telecommunication facility: Any part of the infrastructure of a telecommunications network; or any line, equipment, apparatus, tower, mast, antenna, tunnel, duct, hole, pit, pole or other structure or thing used, or for use, in or in connection with a telecommunications network. Voice over internet protocol (VoIP): A protocol for transmitting voice over data networks, also known as ‘Voice over DSL’.

165

A Appendix x D: Reference es

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Department of Premier and Cabinet, 2008, Victoria’s National Infrastructure Audit – Final Report to COAG and Infrastructure Australia (June), p. 30. 187 Victorian Auditor-General’s Office, 2008, Planning for Water Infrastructure in Victoria, p. 19. 188 National Water Commission, National Water Initiative, website, http://www.nwc.gov.au/www/html/117-national-water-initiative.asp, accessed 1 October 2009. 189 Department of Premier and Cabinet, Media Release, 4 June 2009, website, http://www.premier.vic.gov.au/premier/-newcommonwealth-victorian-water-agreement.html, accessed 1 October 2009. 190 Department of Premier and Cabinet, 2008, Victoria’s National Infrastructure Audit – Final Report to COAG and Infrastructure Australia (June), p. 28 191 Department of Sustainability and Environment, 2007, Our Water Our Future: The Next Stage of the Government’s Water Plan, p. 18. 192 Department of Sustainability and Environment 2007, State Water Report 2005/06, Table 2-3, p. 21. 193 Department of Sustainability and Environment, 2007, Our Water Our Future: The Next Stage of the Government’s Water Plan, p. 18. 194 Our Water, Wimmera-Mallee Pipeline, website, http://www.ourwater.vic.gov.au/programs/water-grid/wimmera-mallee, accessed 1 October 2009. 195 Piping It, Wimmera-Mallee Pipeline Project, website, http://www.pipingit.com.au/index.html, accessed 1 October 2009. 196 Melbourne Water, Melbourne Augmentation Program – Sugarloaf Interconnector, Technical Report, June 2007, webpage, http://www.Melbournewater.com.au/content/library/current_projects/water_supply/sugarloaf_pipeline_project/Sugarloaf_Interconnector_ Tech_Report.pdf, accessed 1 November 2009. 197 Our Water Our Future, Desalination Plant, webpage, http://www.ourwater.vic.gov.au/programs/desalination, accessed 1 November 2009. 198 Melbourne Water, Tarago Reservoir Reconnected, webpage, http://www.Melbournewater.com.au/content/current_projects/water_supply/tarago_project/tarago_project.asp?bhcp=1, accessed 1 November 2009. 199 Department of Premier and Cabinet, 2008, Victoria’s National Infrastructure Audit – Final Report to COAG and Infrastructure Australia (June). 200 Department of Sustainability and Environment, 2008, Augmentation of the Melbourne Water Supply System: Analysis of Potential System Behaviour, p. 3. 201 Department of Sustainability and Environment, 2008, Augmentation of the Melbourne Water Supply System: Analysis of Potential System Behaviour, p. 3. 202 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water and Sewerage Businesses 2007-08, p. 8. 203 Department of Sustainability and Environment, 2008, Augmentation of the Melbourne Water Supply System: Analysis of Potential System Behaviour, p. 3. 204 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water and Sewerage Businesses 2007-08, p. 9. 205 Productivity Commission, 2008, Towards Urban Water Reform: A Discussion Paper, p. 86. 206 Marsden Jacob Associates, 2006, Securing Australia’s Urban Water Supplies: Opportunities and Impediments, p. iv. The figure is based on water supply plans for Sydney, Adelaide, Perth, Newcastle. Lower bound of indirect potable reuse estimate based on Toowoomba. Comparable costings for Melbourne are not available and no costings are available for Queensland. 207 Department of Sustainability and Environment, 2004, Securing Our Water Future Together, p. 7. 208 The Victorian Competition and Efficiency Commission (VCEC) Report, Water Ways: Inquiry into Reform of the Metropolitan Retail Water Sector was released in July 2008, together with the Government’s response. 209 Government of Victoria, 2009, Annual Statement of Government Intentions, p. 77. 210 Victorian Auditor-General’s Office, 2008, Planning for Water Infrastructure in Victoria, pp. 13-14. 211 Victorian Auditor-General’s Office, 2008, Planning for Water Infrastructure in Victoria, pp. 13-14. 212 Melbourne Water, Water Report, website, http://www.Melbournewater.com.au/content/water_storages/water_report/water_report.asp, accessed 22 January 2010 213 Our Water, Monthly Water Report August 2009, website, http://www.ourwater.vic.gov.au/monitoring/monthly, accessed 22 January 2010. 214 Melbourne Water, Water Report, website, http://www.Melbournewater.com.au/content/water_storages/water_report/water_report.asp, accessed 1 October 2009. 215 Melbourne Water, Water Report, website, http://www.Melbournewater.com.au/content/water_storages/water_report/water_report.asp, accessed 22 January 2010. 216 Department of Sustainability and Environment, 2008, Climate Change in Victoria: 2008 Summary, p. 11. 217 Department of Sustainability and Environment, 2008, Climate Change in Victoria: 2008 Summary, p. 11. 218 Department of Sustainability and Environment, 2008, Climate Change in Victoria: 2008 Summary, p. 13. 219 Department of Sustainability and Environment, 2008, Climate Change in Victoria: 2008 Summary, p. 13. 220 Department of Sustainability and Environment, 2007, Our Water Our Future: The Next Stage of the Government’s Water Plan, p. 13. 221 Department of Sustainability and Environment, 2008, Augmentation of the Melbourne Water Supply System: Analysis of Potential System Behaviour, p. 7. 222 Department of Sustainability and Environment, 2008, Augmentation of the Melbourne Water Supply System: Analysis of Potential System Behaviour, p. 7. 223 Department of Sustainability and Environment, 2008, Augmentation of the Melbourne Water Supply System: Analysis of Potential System Behaviour, p. 7. 224 Essential Services Commission, 2009, 2009 Water Price Review Final Decision, p. 23. 225 Our Water, Monthly Water Report August 2009, website, http://www.ourwater.vic.gov.au/monitoring/monthly, accessed 1 October 2009. 226 Department of Sustainability and Environment, 2008, Our Water Our Future – The Next Stage of the Government’s Water Plan 12 Month Progress Report 2008, p. 5. 227 Melbourne Water, Tarago Reservoir Reconnected, website, http://www.Melbournewater.com.au/content/current_projects/water_supply/tarago_project/tarago_project.asp, accessed 1 October 2009. 228 Department of Sustainability and Environment, 2007, Melbourne Augmentation Program Sugarloaf: Technical Report, pp. 2-3. 229 Department of Sustainability and Environment, 2007, Our Water Our Future: The Next Stage of the Government’s Water Plan, p. 4. 230 Department of Sustainability and Environment, 2007, Our Water Our Future: The Next Stage of the Government’s Water Plan, p. 7. 231 Our Water Our Future, Goldfields Superpipe, webpage, http://www.ourwater.vic.gov.au/programs/water-grid/goldfields, accessed 1 November 2009.

170

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232

Essential Services Commission, 2009, Water Price Review Draft Decision, pp. 19-20 and 2009 Water Price Review Final Decision, p. 19. 233 Essential Services Commission, 2009, Water Performance Report- Performance of Urban Water and Sewerage Businesses 200708, p. 53. 234 Essential Services Commission, 2009, Water Performance Report- Performance of Urban Water and Sewerage Businesses 200708, p. 54. 235 Essential Services Commission, 2009, Water Performance Report- Performance of Urban Water and Sewerage Businesses 200708, p. 55. 236 Essential Services Commission, 2009, Water Performance Report- Performance of Urban Water and Sewerage Businesses 200708, p. 56. 237 Essential Services Commission, 2009, Water Price Review Draft Decision, p. 60 and 2009 Water Price Review Final Decision, p. 53. 238 Essential Services Commission, 2008, Overview of Final Decision on Water Prices: Fact Sheet 1, p. 1. 239 Department of Premier and Cabinet, 2008, Victoria’s National Infrastructure Audit – Final Report to COAG and Infrastructure Australia (June). 240 Essential Services Commission, 2009, Water Performance Report- Performance of Urban Water and Sewerage Businesses 200708, pp. 74-75. 241 National Water Commission, International Water Association World Congress on Water Reclamation and Reuse 2009 webpage, http://www.nwc.gov.au/www/html/2469-iwa-congress-on-water-reclamation-and-reuse-2009.asp?intSiteID=1, accessed 2 October 2009. 242 Department of Sustainability and Environment, 2007, Our Water Our Future: The Next Stage of the Government’s Water Plan, p. 17. 243 Melbourne Water, Eastern Treatment Plant – Planned Upgrade website, http://www.Melbournewater.com.au/content/current_projects/sewerage/eastern_treatment_plant__planned_upgrade/Eastern_Treatment_Plant_-_planned_upgrade.asp, accessed 1 October 2009. 244 Northern Sewerage Project, website, http://www.nsp.net.au/, accessed 1 October 2009. 245 Melbourne Main Sewer Replacement, website, http://Melbournemain.Melbournewater.com.au/, accessed 1 October 2009. 246 Source is Tables 2.1 to 2.3. 247 This is instead of total nitrogen (TN) and total dissolved solids (TDS). 248 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water And Sewerage Businesses 200708, p. 81. 249 Environment Protection Authority, 2003, Guidelines for Environmental Management: Use of Reclaimed Water, Victorian Government, pp. iv-vii. 250 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water and Sewerage Businesses 2007-08, p. 81. Lower Murray Water and Gippsland Water were the only businesses to treat sewage to a primary level in 2007/08. Gippsland Water commented that the primary level treated waste is non-organic saline waste, transferred via a dedicated pipeline from the Latrobe Valley Power Stations. 251 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water and Sewerage Businesses 2007-08, p. 81. 252 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water and Sewerage Businesses 2007-08, p. 82. 253 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water and Sewerage Businesses 2007-08, p. 8. 254 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water and Sewerage Businesses 2007-08, p. 81. 255 Melbourne Water, Sewerage, website, http://www.melbournewater.com.au/images/sewerage/n_12_lrg.jpg, accessed 2 February 2010. 256 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water and Sewerage Businesses 2007-08, p. 8. 257 Melbourne Water, Recycling Water for a Greener Future, webpage, http://www.waterrecycling.vic.gov.au/default.asp, accessed on 28 September 2009. 258 Melbourne Water, Recycled water, website, http://www.waterrecycling.vic.gov.au/default.asp, accessed 1 October 2009. 259 Department of Sustainability and Environment, 2007, Our Water Our Future: The Next Stage of the Government’s Water Plan, p. 12. 260 Department of Premier and Cabinet, Media Release, 26 June 2009, website, http://www.premier.vic.gov.au/minister-forwater/business-case-finds-recycled-water-projects-too-expensive.html, accessed 1 October 2009. 261 Essential Services Commission, 2008, Water Performance Report Performance of Urban Water and Sewerage Businesses 2007-08, March 2009, p. 85. 262 Adapted from Department of Sustainability and Environment, 2007, Our Water Our Future: The Next Stage of the Government’s Water Plan, p. 5. 263 Essential Services Commission, 2009, Metropolitan Melbourne Water Price Review 2009. 264 Essential Services Commission, 2009, Metropolitan Melbourne Water Price Review 2009. 265 Department of Sustainability and Environment, 2007, Our Water Our Future: The Next Stage of the Government’s Water Plan, p. 1. 266 VCEC, 2008, Water Ways: Inquiry into Reform of the Metropolitan Retail Water Sector. p. 100 267 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water and Sewerage Businesses 2007-08, p. 66. 268 Essential Services Commission, 2009, Water Price Review Draft Decision, pp. 19-20 and 2009 Water Price Review Final Decision, p. 19. 269 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water and Sewerage Businesses 2007-08, p. 67. 270 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water and Sewerage Businesses 2007-08, p. 70. 271 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water and Sewerage Businesses 2007-08, p. 71. 272 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water and Sewerage Businesses 2007-08, p. 83. 273 Essential Services Commission, 2009 Water Price Review Draft Decision, p. 61. 274 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water and Sewerage Businesses 2007-08, p. 83. 275 Essential Services Commission, 2009, Water Performance Report: Performance of Urban Water and Sewerage Businesses 2007-08, p. 85.

171

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National Water Commission, International Water Association World Congress on Water Reclamation and Reuse 2009 webpage, http://www.nwc.gov.au/www/html/2469-iwa-congress-on-water-reclamation-and-reuse-2009.asp?intSiteID=1, accessed 2 October 2009. 277 Melbourne Water, 2008, Melbourne Water’s Submission to the VCEC Inquiry into Reform of the Metropolitan Retail Water Sector, p. 13. 278 VCEC, 2008, Water Ways: Inquiry into Reform of the Metropolitan Retail Water Sector, pp. 104-6. 279 Victorian Auditor-General’s Office, 2005, Managing stormwater flooding risks in Melbourne, p. 3. 280 Melbourne Water, 2008, Port Phillip and Westernport Region Flood Management and Drainage Strategy, p. 10. 281 Melbourne Water, 2008, Port Phillip and Westernport Region Flood Management and Drainage Strategy, p. 10. 282 Department of Sustainability and the Environment, 2006, Central Region Sustainable Water Strategy: Action to 2055. 283 Department of Sustainability and the Environment, 2006, Central Region Sustainable Water Strategy: Action to 2055, p. 42. 284 VCEC, 2008, Water Ways: Inquiry into Reform of the Metropolitan Retail Water Sector, pp.104-6. 285 Parliament of Victoria, 2009, Inquiry into Melbourne’s Future Water Supply: Report of the Environment and Natural Resources Committee on the Inquiry into Melbourne’s Future Water Supply, p. 117. 286 Engineers Australia, 2005, Victorian Infrastructure Report Card, p. 44. 287 Engineers Australia, 2005, Victorian Infrastructure Report Card, p. 44. 288 Victorian Government, February 2007, Victorian Stormwater Action Program Final Report. 289 Parliament of Victoria, 2009, Inquiry into Melbourne’s Future Water Supply: Report of the Environment and Natural Resources Committee on the Inquiry into Melbourne’s Future Water Supply, p. 117. 290 Parliament of Victoria, 2009, Inquiry into Melbourne’s Future Water Supply: Report of the Environment and Natural Resources Committee on the Inquiry into Melbourne’s Future Water Supply, p. 147. 291 Begg, Peter, 2009, Barwon Water investigates new aquifer plan Stormwater stores in Geelong Advertiser, 5 September. 292 EPA Victoria, 2007, Victorian Stormwater Action Program final report 293 Christie Peucker, 2009, Council helps itself in Geelong Advertiser, 10 September. 294 WaterSmart, Water Supply-Demand Strategy for Melbourne 2006-2055, Melbourne, 2006, p. 12. 295 Australian Bureau of Statistics, 2008, 4602.0 Environmental Issues: People's Views and Practices, Mar 2007, http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/4602.0Mar 2007?OpenDocument, accessed 1 November 2009. 296 Department of Sustainability and Environment, Rain Tank and Greywater Report, 15 October 2009. 297 Victorian Auditor-General’s Office, 2005, Managing stormwater flooding risks in Melbourne, p. 3. 298 Victorian Auditor-General’s Office, 2005, Managing stormwater flooding risks in Melbourne, p. 77. 299 Victorian Auditor-General’s Office, 2005, Managing stormwater flooding risks in Melbourne, p. 3. 300 National Water Commission, Water supply and services, website, http://www.nwc.gov.au/www/html/2073-rural-water-storage-anddelivery.asp, accessed 1 October 2009. 301 National Water Commission, 2009, National Performance Report 2007–08: Rural water service providers, pp. 68-69, 74-75, 106-107, 122-123, 138-140. 302 Department of Sustainability and Environment, 2007, Our Water Our Future: The Next Stage of the Government’s Water Plan. 303 Our Water, Northern Victoria Irrigation Renewal Project, website, http://www.ourwater.vic.gov.au/programs/irrigation-renewal/nvirp, accessed 1 October 2009. 304 Goulburn Murray Water, Goulburn-Murray Water Region webpage, http://www.gmwater.com.au/downloads/GMW_AR_map_landscape.pdf, accessed 1 October 2009. 305 National Water Commission, Water Markets webpage, http://www.nwc.gov.au/www/html/1957-water-markets.asp, accessed 1 October 2009. 306 Department of Premier and Cabinet, Press Release, 4 June 2009, website, 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Department of Premier and Cabinet, 2008, Victoria’s National Infrastructure Audit – Final Report to COAG and Infrastructure Australia (June). 314 Department of Sustainability and Environment, 2007, Our Water Our Future: The Next Stage of the Government’s Water Plan, pp. 89 315 Lower Murray Water, Press Release, 23 March 2009, website, http://www.lmw.vic.gov.au/html/documents/MediaReleaseRobinvaleIrrigationUpdate230309.pdf, accessed 1 October 2009. 316 Lower Murray Water, Sunraysia Modernisation Project, 23 March 2009, website, http://www.lmw.vic.gov.au/SunraysiaModernisationProject.htm, accessed 1 October 2009. 317 Department of the Environment, Water, Heritage and the Arts, Irrigation Hotspots Project, website, http://www.environment.gov.au/water/publications/action/irrigation-hotspots.html, accessed 1 October 2009. 318 National Water Commission, 2009, National Performance Report 2007–08: Rural water service providers. 319 National Water Commission, 2009, Australian water reform 2009: Second biennial assessment of progress in implementation of the National Water Initiative, p. 203. 320 Parliament of Victoria, Legislative Assembly Hansard, 15 October 2008, pp. 41-43. 321 Department of Primary Industries, Energy and Earth Resources Policy webpage, http://www.dpi.vic.gov.au/DPI/dpinenergy.nsf/childdocs/-3F827E74C37E0836CA25729D00101EB0?open#key, accessed 30 September 2009. 322 Department of Resources, Energy and Tourism, Energy White Paper webpage, http://www.ret.gov.au/energy/facts/white_paper/Pages/energy_white_paper.aspx accessed 30 September 2009. 323 Department of Premier and Cabinet, Victoria’s Plan for Climate Change and Energy webpage, http://www.premier.vic.gov.au/stateof-government-intentions/victorias-plan-for-climate-change-and-energy.html, accessed 30 September 2009. 324 Origin Energy webpage, http://www.originenergy.com.au/1376/Mortlake-Power-Station-Project, accessed 30 September 2009. 325 The Victorian Renewable Energy Amendment Bill 2009 (the Bill) passed Legislative Assembly on 1 September 2009 and has now been introduced to the Legislative Council. The Bill paves the way for a transition of the Victorian Renewable Energy Target (VRET)

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scheme to a new federal eRET scheme by the end of January 2010. Federal legislation has increased the renewable energy target to 20% by 2020. Essential Services Commission, Legislation, webpage, http://www.esc.vic.gov.au/public/VRET/Legislation.htm, accessed 1 November 2009. 326 The enabling legislation, the Electricity Industry Amendment (Premium Solar Feed-In Tariff) 2009, was passed in June 2009. 327 Adapted from ABARE, 2009, Energy in Australia 2009, p. 19. 328 Australian Energy Regulator, 2008, State of the Energy Market 2008, pp. 65-66. 329 Australian Energy Regulator, 2009, State of the Energy Market 2009, p. 61. 330 Australian Energy Regulator, 2009, State of the Energy Market 2009, pp. 63-64. 331 Minister for Energy and Resources, 14 January 2010, media release, www.premier.vic.gov.au/newsroom/9185.html, accessed 25 January 2010. 332 VENCorp, 2009, Victoria Annual Planning Report 2009: Victorian Electricity & Gas Transmission Networks. 333 Australian Energy Regulator, 2009, The State of the Energy Market 2009, p. 127. 334 Australian Energy Regulator, 2009, The State of the Energy Market 2009, p. 127. 335 Department of Premier and Cabinet, 2008, Victoria’s National Infrastructure Audit – Final Report to COAG and Infrastructure Australia (June), pp. 44-45. 336 Australian Energy Regulator, 2009, The State of the Energy Market 2009, p. 156. 337 Previously Alinta AE. 338 Essential Services Commission, 2009, Energy Retailers Comparative Performance Report 2008-09, p. 10. 339 VENCorp, 2009, Vision 2030: 25 year vision for Victoria’s Energy Transmission Networks, p. 31. 340 AEMC, 2008, Annual Electricity Market Performance Review 2008, p. 6. This objective is defined in the National Electricity Law. 341 VENCorp, 2008, Victoria Annual Planning Report 2008: Victorian Electricity & Gas Transmission Networks, p. 21. 342 AEMO, 2009, An Introduction to Australia’s National Electricity Market, p.18. 343 Jemena Electricity Networks (Vic) Ltd, CitiPower, Powercor Australia, United Energy Distribution, and SPI Electricity, 2008, Transmission Connection Planning Report, pp. 4-5. 344 AEMO, 2009, An Introduction to Australia’s National Electricity Market, p. 23. 345 Energy and Water Ombudsman (Victoria), Complaint handling webpage, http://www.ewov.com.au/AboutEWOV/Complainthandling.aspx, accessed 30 September 2009. 346 Energy Safe Victoria, ESV’s role webpage, http://www.esv.vic.gov.au/AboutESV/TheroleofESV/tabid/138/Default.aspx, accessed 30 September 2009. 347 AEMC, 2009, Annual Market Performance Review 2008-09, pp. 22-23. 348 AEMC, 2009, Annual Market Performance Review 2008-09, p. 23. 349 AEMO, 2009, Electricity Statement of Opportunities Key Results webpage, http://www.aemo.com.au/corporate/0057-0003.pdf, accessed 1 November 2009. Based on 10% Probability of Exceedence (POE) summer maximum demand. 10% POE Average, Probability of Exceedence (POE). Refers to the probability that a forecast maximum demand figure will be exceeded. A forecast 10% POE maximum demand figure will, on average, be exceeded only one year in every 10. 350 AEMO, 2009, 2009 Electricity Statement of Opportunities: Executive Briefing, p. 9. The assumptions include the commissioning of the Bogong Power Station by December 2009, and the Mortlake Stage 1 Power Station (Victoria) prior to summer 2010/11, and in South Australia the Clements Gap Wind Farm and Hallett Hill Wind Farm. It also assumes that the capacity of Dartmouth Power Station (Victoria) will be reduced until winter 2012 due to water shortages. 351 AEMO, 2009, 2009 Electricity Statement of Opportunities: Executive Briefing, p. 9. 352 AEMO, 2009, 2009 Electricity Statement of Opportunities: Executive Briefing, p. 9. 353 ESOO 2009. NB. Medium Term Projected Assessment of System Adequacy (MTPASA) is the primary tool used to assess the expected supply and demand of electricity for a period of 24 months from the following Sunday. It is published every Tuesday and has daily resolution. The MTPASA results are used to understand the supply/demand outlook in the medium term, to provide information to generators regarding planned maintenance of generating units, and to provide triggers for the AEMO to address forecast reserve shortfalls. The MTPASA results are published as a .csv file at: http://www.nemweb.com.au/REPORTS/CURRENT/Medium_Term_PASA_Reports/. 354 VENCorp, 2008, Victoria Annual Planning Report 2008: Victorian Electricity & Gas Transmission Networks, p. 7. 355 Summer is the focus because this is the season in which peak electricity demand occurs and therefore wind generation in this season is required to determine if supply will meet demand. 356 Department of Primary Industries, Wind Projects in Victoria webpage, http://www.dpi.vic.gov.au/DPI/dpinenergy.nsf/LinkView/FD29EA297F0AB66DCA2573540007C7D6384C1AC0F3D5716CCA25729D001 02547, accessed 30 September 2009. 357 VENCorp, 2009, Vision 2030: 25 year vision for Victoria’s Energy Transmission Networks, p. 39. 358 Australian Energy Regulator, 2008, State of the Energy Market 2008, p. 57. 359 VENCorp, 2008, Victoria Annual Planning Report 2008: Victorian Electricity & Gas Transmission Networks. 360 NEMMCO, 2009, Drought Scenario Investigation: December 2009 Update, p. 5. 361 NEMMCO, 2009, Drought Scenario Investigation: December 2009 Update, p. 10. 362 National Water Commission, 2009, Water and the electricity generation industry: Implications of use, Waterlines Report Series No. 18, p. 50. 363 National Water Commission, 2009, Water and the electricity generation industry: Implications of use, Waterlines Report Series No. 18, p. 59. 364 National Water Commission, 2009, Water and the electricity generation industry: Implications for use, p. 34. 365 AEMC, 2008, Annual Electricity Market Performance Review 2008, p. 9. 366 Essential Services Commission, 2008, Electricity Distribution Businesses Comparative Performance Report 2007, pp. 62-63. 367 VENCorp, 2009, Review Of Victorian Summer 2008/09, p. 6. 368 Australian Energy Regulator, 2008, State of the Energy Market 2008. p. 124. 369 Australian Energy Regulator, 2008, State of the Energy Market 2008. p. 123. 370 Australian Energy Regulator, 2009, State of the Energy Market 2009, p. 141. 371 Victorian Government, 2008, Victoria’s National Infrastructure Audit – Final Report to COAG and Infrastructure Australia, pp. 44-45. 372 VENCorp, 2009, Vision 2030: 25 year vision for Victoria’s Energy Transmission Networks, p. 12, called Fault Level Management Strategy. 373 AEMC, 2008, Annual Electricity Market Performance Review 2008, p. 66. The Essential Service Commission of Victoria (ESC) sets performance targets for unplanned SAIFI, unplanned SAIDI and MAIFI for the calculation of the financial incentive for improving supply reliability. Financial rewards and penalties apply to DNSPs depending on how their performance compares with their respective performance targets, in accordance with the S-factor scheme. DNSPs are also required to make guaranteed service level (GSL) payments to the worst-served customers if there have been excessive sustained supply outages and momentary interruptions. 374 Australian Energy Regulator,2009, Victorian Electricity Distribution Businesses-Comparative Performance Report 2008, p. 77.

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Australian Energy Regulator,2009, Victorian Electricity Distribution Businesses-Comparative Performance Report 2008, p. 5. Australian Energy Regulator,2009, Victorian Electricity Distribution Businesses-Comparative Performance Report 2008, p. 17. 377 Australian Energy Regulator,2009, Victorian Electricity Distribution Businesses-Comparative Performance Report 2008, p. 1. 378 Essential Services Commission, 2008, Electricity Distribution Businesses Comparative Performance Report 2007, p. 61. 379 United Energy Distribution, Environment webpage, http://www.ue.com.au/community/comm_environment.asp., accessed 30 September 2009. 380 The upper temperature limits for normal cable operation are 43ºC in Victoria and 33ºC in Tasmania. Air temperatures in Tasmania reached a record high of 35ºC. Will Steffen, Climate Change 2009: Faster Change and More Serious Risks, Department of Climate Change, Commonwealth of Australia, p. 26. 381 Victorian Auditor-General, 2009, Towards a ‘smart grid’ – The roll-out of Advanced Metering Infrastructure, pp. 26-28. The 2009 Victorian Auditor General report into smart meters noted that projections of demand management impact may be overly optimistic as stated in the business case justifying the smart meter rollout. 382 Australian Energy Regulator, 2008, State of the Energy Market 2008, p. 241. 383 Department of Primary Industries, Energy Industries webpage, http://www.dpi.vic.gov.au/dpi/dpinenergy.nsf/childdocs/018162A57070013FCA257640002525CE?Open&Layout=DPI+Site~Printer%20F riendly#pro, accessed 30 October 2009. 384 Australian Energy Regulator, 2009, State of the Energy Market 2009, p. 226. 385 Victorian Government, 2008, Victoria’s National Infrastructure Audit – Final Report to COAG and Infrastructure Australia, p. 45. 386 Victorian Government, 2008, Victoria’s National Infrastructure Audit – Final Report to COAG and Infrastructure Australia, p. 45. 387 Australian Energy Regulator, 2008, State of the Energy Market 2008, p. 227. 388 Australian Energy Regulator, 2008, State of the Energy Market 2008, p. 227. 389 VENCorp, 2008, Guide to the Victorian Gas Wholesale Market, p. 4. 390 Energy Safe Victoria 2009, Upstream natural gas safety report periods, 1998 to 2008, and Australian Energy Regulator, 2009, State of Energy Market 2009, p. 277. 391 ESC, 2009, Victorian Gas Distribution Businesses Supply Area Boundaries. 392 Essential Services Commission, Who are the gas and electricity retailers webpage, http://www.esc.vic.gov.au/public/For+Consumers/Energy/Who+are+the+gas+and+electricity+retailers/Who+are+the+gas+and+electricit y+retailers.htm, accessed 30 September 2009. 393 Essential Services Commission, 2009, Energy Retailers Comparative Performance Report 2008-09, p. 10. 394 Parliament of Victoria, Legislative Assembly Hansard, 15 October 2008, p. 4143 395 VENCorp, 2008, Victoria Annual Planning Report 2008: Victorian Electricity & Gas Transmission Networks, p. 21. 396 The National Gas Market Bulletin Board facilitates trade in gas and tracks capacity flows on all major gas production fields, major demand centres and natural gas transmission pipeline systems. 397 Australian Energy Market Operator, About AEMO webpage, http://www.aemo.com.au/aboutaemo.html, accessed 30 September 2009. 398 Parliament of Australia, Parliamentary Library, Research Paper no. 25 2007–08, Australia’s natural gas: issues and trends webpage, www.aph.gov.au/library/Pubs/rp/2007-08/08rp25.htm, accessed 30 September 2009. 399 Previously, ESC regulated gas distribution and retailing under the Gas Industry Act 2001, the Essential Services Commission Act 2001, and the National Third Party Access Code for Natural Gas Pipeline Systems (the Code). 400 Australian Energy Regulator, 2008, State of the Energy Market 2008, p. 229. 401 Australian Energy Regulator, 2008, State of the Energy Market 2008, p. 230. 402 VENCorp, 2008, Victoria Annual Planning Report 2008: Victorian Electricity & Gas Transmission Networks. 403 VENCorp, 2008, Victoria Annual Planning Report 2008: Victorian Electricity & Gas Transmission Networks. 404 Australian Energy Regulator, 2008, State of the Energy Market 2009, p. 38. 405 Australian Energy Regulator, 2009, State of the Energy Market 2009, p. 308. 406 The decision to proceed on this project has been delayed, with a final decision pushed back from late 2009 to early next year. Chambers, Matt, 2009, ‘Santos slugged by lower prices’ in The Australian, 21 August 2009. 407 VENCorp, 2008, Victoria Annual Planning Report 2008: Victorian Electricity & Gas Transmission Networks. 408 VENCorp, 2008, Victoria Annual Planning Report 2008: Victorian Electricity & Gas Transmission Networks. 409 VENCorp, 2008, Victoria Annual Planning Report 2008: Victorian Electricity & Gas Transmission Networks, and VENCorp, 2009, Victoria Annual Planning Report 2009: Victorian Electricity & Gas Transmission Networks. 410 VENCorp, 2009, Victoria Annual Planning Report 2009: Victorian Electricity & Gas Transmission Networks, pp 46. 411 AEMO, 2009, Victorian Annual Planning Report Update (Gas), p. 5. 412 VENCorp, 2009, Vision 2030: 25 year vision for Victoria’s Energy Transmission Networks, p. 10. 413 ESC, 2008, Gas Distribution Businesses Comparative Performance Report 2007, p. 33. 414 ESC, 2008, Gas Distribution Businesses Comparative Performance Report 2007, p. 33. 415 ESC, 2008, Gas Distribution Businesses Comparative Performance Report 2007, p. 33. 416 ESC, 2008, Gas Distribution Businesses Comparative Performance Report 2007, p. 33. 417 Energy Safe Victoria, 2009, Upstream Natural Gas Safety Report Periods 1998 to 2008. 418 ESC, 2008, Gas Distribution Businesses Comparative Performance Report 2007, p. 33. 419 ESC, 2008, Gas Distribution Businesses Comparative Performance Report 2007, p. 2. 420 ESC, 2008, Gas Distribution Businesses Comparative Performance Report 2007, p. 2. 421 ESC, 2008, Gas Distribution Businesses Comparative Performance Report 2007, pp. 21-2. 422 ESC, 2008, Gas Distribution Businesses Comparative Performance Report 2007, pp. 21-2. 423 ESC, 2008, Gas Distribution Businesses Comparative Performance Report 2007, p. 24. 424 ESC, 2008, Gas Access Arrangement Review 2008-2012, Final Decision – Public Version, 7 March, pp. 334-343. 425 ESC, 2008, Gas Distribution Businesses Comparative Performance Report 2007, p. 2. 426 ESC, 2008, Gas Distribution Businesses Comparative Performance Report 2007, p. 2. 427 AEMO, 2009, Victorian Annual Planning Report Update (Gas), p. 1-6. 428 Victorian Government, 2008, Victoria’s National Infrastructure Audit – Final Report to COAG and Infrastructure Australia, June, p. 44. 429 VENCorp, 2008, Victoria Annual Planning Report 2008: Victorian Electricity & Gas Transmission Networks, p. 12. 430 Engineers Australia, 2007, Telecommunications Infrastructure Report Card, p. 1. 431 The ACCC has recently expressed concern about coverage and speed claims made by internet and mobile phone providers. See for example, Broadband Internet speed claims and the Trade Practices Act—Information paper, 2007 www.accc.gov.au/content/index.phtml/itemId/779405 and ACCC Media release, MR 328/07, December 2007 432 ACMA, 2009, Convergence and Communications Report 1, p.8. 433 AMTA, 2008, Australian Mobile Telecommunications Industry: Economic significance and contribution, p. 6. 434 ACMA, 2008, Top Six Trends in Communications and Media Technologies, p. 5. 376

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Appendix D: References

435

ACMA, Telecommunications Regulation, webpage, http://www.acma.gov.au/WEB/STANDARD/1001/pc=PC_1593, accessed 7 September 2009. 436 Draft legislation was released on 13 September 2009. http://www.minister.dbcde.gov.au/media/media_releases/2009/08. 437 These facilities are described in the Telecommunications Act 1997, the Telecommunications (Low-impact Facilities) Determination 1997, and the Telecommunications Code of Practice 1997. 438 Department of Sustainability and the Environment, 2004, Victorian Code of Practice for Telecommunication Facilities p. 3. 439 ACMA, Telecommunications regulation, webpage, http://www.acma.gov.au/WEB/STANDARD..PC/pc=PC_1593, accessed 7 September 2009. 440 ACMA, 2008, Top Six Trends in Communications and Media Technologies, p. 4. 441 Created from Department of Broadband, Communications and the Digital Economy, National Broadband Network: 21st century broadband webpage, http://www.dbcde.gov.au/funding_and_programs/national_broadband_network, accessed 16 November 2009. ACMA, Digital Data Service Obligation webpage, http://www.acma.gov.au/scripts/nc.dll?WEB/STANDARD/1001/pc=PC_1722, accessed 16 November 2009. 442 ABS, 8153.0 - Internet Activity, Australia, Jun 2009, Subscribers by states and territories by ISP size, for ISPs with more than 1,000 active subscribers. 443 ACMA, 2009, Convergence and Communications Report 2, p.13. 444 Multimedia Victoria, 2004, Economic Impacts of Broadband Adoption in Victoria, p. 29. 445 The proposed Act is called Telecommunications Legislation Amendment (Fibre Deployment) Act 2010. Department of Broadband, Communications and the Digital Economy, Fibre in Greenfields Estate webpage, http://www.dbcde.gov.au/broadband/national_broadband_network/fibre_in_greenfield_estates, accessed 4 January 2009. 446 Minister for Broadband, Communications and the Digital Economy, 6,000km regional broadband backbone for National Broadband Network media release, 4 December 2009, webpage http://www.minister.dbcde.gov.au/media/media_releases/2009/109, accessed 4 December 2009. 447 Victorian Government Paper, 2009, Submission to Commonwealth Government’s Backhaul Blackspots Initiative Consultation. 448 Victorian Government Paper, 2009, Submission to Commonwealth Government’s Backhaul Blackspots Initiative Consultation. p. 5. 449 Department of Innovation, Industry and Regional Development, 2008, VicFibreLINKS factsheet, p. 1. 450 Victorian Government Paper, 2009, Submission to Commonwealth Government’s Backhaul Blackspots Initiative Consultation. p. 7. 451 Victorian Government Paper, 2009, Submission to Commonwealth Government’s Backhaul Blackspots Initiative Consultation. p. 6. 452 Multimedia Victoria, 2009, Victorian Government ICT Industry Plan 2005-2010 – Progress Report, p. 14. 453 Multimedia Victoria, 2009, Victorian Government ICT Industry Plan 2005-2010 – Progress Report, p. 15. 454 Department of Treasury and Finance, Government Services Group, Intra-Government Secure Network, webpage, http://gsgictonline.dtf.vic.gov.au/CA257310001D7FC4/pages/ict-projects-intra-government-secure-network, accessed 9 November 2009. 455 VicTrack, 2009, Annual Report 2008-09, p. 25. 456 http://www.victrack.com.au/index.php?action=Telecommunications/VicTrackTelecommunicationsNetwork. 457 The details of Telstra’s fulfilling its obligations as universal service provider is contained in the Telstra policy statement and marketing plan approved by ACMA. These are available from http://www.telstra.com.au/abouttelstra/commitments/uso.cfm. 458 ACMA, 2008, Telecommunications Today Report 4: Consumer Satisfaction, p.12. 459 ACMA, 2009, Convergence and Communications, p. 9. 460 Telecommunications Industry Ombudsman, 2009, Annual Report Part 1, p. 5. 461 ACCC & ACMA, 2008, Communications Infrastructure and Services Availability in Australia, p. 28. 462 ACCC & ACMA, 2008, Communications Infrastructure and Services Availability in Australia, p.5. 463 ACCC & ACMA, 2008, Communications Infrastructure and Services Availability in Australia, p.5 464 ACCC & ACMA, 2008, Communications Infrastructure and Services Availability in Australia, p.6. 465 ACCC & ACMA, 2008, Communications Infrastructure and Services Availability in Australia, p.6. 466 ACCC & ACMA, 2008, Communications Infrastructure and Services Availability in Australia, p.6. 467 Municipal Association of Victoria, Correspondence, 1 November 2009. 468 ADSL2Exchanges, Victorian ADSL webpage, http://www.adsl2exchanges.com.au/providerexchanges.php?Location=VIC, accessed 23 November 2009. 469 ADSL2Exchanges, Victorian ADSL webpage, http://www.adsl2exchanges.com.au/providerexchanges.php?Location=VIC, accessed 23 November 2009. 470 Telecommunications Industry Ombudsman, 2009, Annual Report Part 1, p. 5. 471 Municipal Association of Victoria, Correspondence, 1 November 2009. 472 Victorian Auditor-General’s Office, 2008, Maintaining the State’s Regional Arterial Road Network, p. 7. 473 Victorian Auditor-General’s Office, 2008, Maintaining the State’s Regional Arterial Road Network, p. 1.

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