Chair and chief executive’s report

ChairChiefExecutiveReport V3

As a company, we work hard to gain and sustain the trust of the communities we serve. We do this in numerous ways – by delivering safe and reliable water and wastewater services every day and by engaging with our communities on the things that matter to them.

 

Delivering things that matter in ways that show we care

We are proud of the work we have done to serve our communities over the past 12 months. We have provided 138 billion litres of Aa-grade water and treated 167 billion litres of wastewater; and we have invested $447 million in upgrading and expanding our infrastructure to become future fit.

For the Warkworth community, our investment this year means they now have a secure water source and treatment plant which will support population growth and withstand extended dry periods. On the Hibiscus Coast, the upgrade of the Army Bay Wastewater Treatment Plant means the surrounding area can continue to grow and flourish without adversely affecting the health of the environment.

When carrying out infrastructure projects in our communities, we are always conscious of the impact we have on the well-being of residents, businesses and commuters. Therefore, we try to minimise the effects of construction. For example, we are using a tunnel boring machine (TBM) to install the final three sections of the Hūnua 4 Watermain because these sections run under some of the busiest roads in Auckland. Open-trenching was technically possible but we believed it was not acceptable given the significant disruption it would cause to motorists and businesses. With our TBM, this year we were able to complete the first of the three sections ahead of schedule and with minimal external effects. This major watermain – which is up to 1.9 metres in diameter – provides for population growth across Auckland and improves the resiliency of our wider water network.

 

Building trust through openness and transparency

To gain the trust of our communities, we have to be open and transparent in terms of the challenges we face. Earlier this year, our Māngere Wastewater Treatment Plant began emitting odours that affected the local community. These odours were caused by our digesters due to a temporary bacterial imbalance. Initially, we did not appreciate the effect this malfunction was having on local residents as we focused on our operational response. This soon changed. We began providing updates via our local stakeholder networks, mainstream and social media, and on our website. We also undertook daily odour monitoring beyond the plant’s boundary to ensure we had a clear understanding of what the residents were experiencing.

Another challenge this year has been the weather. While Auckland enjoyed regular rainfall over the first six months of this financial year, the 1 January to 30 June period was the driest on record. The lack of rainfall has had an impact on our total water storage which was 59.2% at the end of June compared to a historic average of 84.2% for that time of year. In response, we have been maximising our production from the Waikato River and Onehunga aquifer sources to reduce demand on our water storage dams. From July 2019, we have also been asking Aucklanders to be mindful of their water use in case the dry weather continues.

As we address this water storage challenge over the 2019/20 financial year, we will continue to engage with our communities using a variety of channels, including social media and partnerships. In October 2018, we launched our new-look Facebook page where we share our milestones, daily operations and challenges with a broad Auckland-based audience. In January 2019, we signed a partnership agreement with Plunket to educate families about what they can flush down the toilet. Over the first two quarters of 2019/20, our partnership with Plunket will focus on providing information on reducing water usage.

 

Becoming future fit by responding to changing environments

For Watercare to become future fit, we need to respond to the changing environment and harness the power of digital technology. In July 2018, Watercare was one of around 60 companies that launched the Climate Change Coalition which aims to promote business leadership and collective action on the issue of climate change. Since then, we have launched our company’s Climate Change Strategy which has two broad focuses: mitigation and adaptation. These are about becoming a low-carbon organisation and ensuring our infrastructure can cope with climate change. Partnerships with the Water Association of Australia (WSAA) and frameworks such as the 17 United Nations Sustainable Development Goals are important tools to support us as we become future fit.

Embracing renewable energy is one of the initiatives highlighted in our Climate Change Strategy. In May 2019, we opened our first solar array at our Pukekohe Wastewater Treatment Plant. Its 400 solar panels can generate about 170 megawatt hours of energy per year. A further three solar array installations will be commissioned over the next financial year.

Other mitigation initiatives include increasing our fleet of electric vehicles and carrying out a major tree planting programme in the Hūnua Ranges. The full-scale planting project began in July 2018 with 86,500 trees planted that season. We expect to plant at least 300,000 trees more in 2019/20 which is a pleasing achievement. By 2048, we should have planted over three million trees.

These initiatives will help us to realise two of our long-term targets, which are to reduce greenhouse gas emissions by 45% by 2030 and to reduce our carbon emissions to NetZero by 2050.

Our Strategic Transformation Programme – which is focusing on delivering widespread business process improvements – entered its delivery phase this year. We rolled out new systems that will streamline how we manage assets, procurement, finance and projects. This coming financial year, we will introduce a new customer and billing system.

 

Ambitious targets are challenging us to be better tomorrow than we are today

This year, we announced an ambitious target called 40:20:20. It challenges our business to reduce carbon in construction by 40% by 2024; to reduce the cost to deliver our infrastructure programme by 20% by 2024; and to improve health, safety and wellness by 20% year on year.

We understand that to achieve 40:20:20 we have to change the way we do business and enhance our productivity. Traditionally, we have delivered infrastructure on a project-by-project basis.

This year, we have been developing a programme-delivery framework called the Enterprise Model that relates to our mid-sized projects.

It involves us working with two construction partners over a 10-year period on a $2.5 billion programme of work.
By doing so, we will realise the benefits of early contractor engagement: enabling us to co-develop low-carbon designs and construction methods; secure and retain the best talent; and achieve greater productivity and efficiency. We plan to sign contracts with these construction partners in the first quarter of the 2020 financial year.

 

Leaving a legacy with the Central Interceptor

In March 2019, we signed a construction contract with Ghella-Abergeldie Joint Venture for the delivery of the Central Interceptor. This $1.2 billion project promises to leave a legacy for wider Auckland, local communities and our industry.

Running from Western Springs to the Māngere Wastewater Treatment Plant, this large wastewater pipe provides
for growth and will also deliver cleaner waterways and beaches by significantly reducing the volume of overflows in central Auckland.

While the pipe is being built over a five-year period, we will develop close relationships with the communities along its 13-kilometre route. We will share our progress and involve them in the development of our enhancement plans, ensuring their areas are better off as a result of our project. For example, we plan to rehabilitate the Norwood Reserve in Mt Albert to become an ecologically-significant rock forest.

 

Fostering talent in Tāmaki Makaurau

Given the limited human resource within the industry, it is essential our business grows talent. We are doing this by working with industry partners and tertiary education providers to deliver graduate programmes as well as apprenticeship and internship opportunities.

This year, we piloted two digital solutions for career development and individual learning. These tools encourage our staff to set personal career goals and work systematically towards achieving them. From a hands-on training perspective, we were proud to open a maintenance training facility at Māngere in October 2018. It has a replica of a suburban street, enabling our new recruits to master core skills in a realistic and safe environment.

We have been encouraging our employees to increase their understanding of tikanga Māori as well as their ability to speak te reo by running the intensive ‘Te Kunenga o te Ao Tikanga’ course offered by Te Wānanga o Aotearoa. In this course, our people learn about the tikanga values that underpin everything that is Māori, including: whanaungatanga (our relationships with others); manaakitanga (taking care of the people around you); rangatiratanga (leadership); kaitiakitanga (guardianship of the land, water, sky); and mātauranga(sharing of knowledge). We believe that by participating in this course, our teams will have greater understanding of mana whenua and be better placed to serve the diverse people of Tāmaki Makaurau.

This year’s staff survey delivered pleasing results. Our overall engagement score remained stable at 67, with the results suggesting that staff are confident in Watercare’s leadership and believe our company cares about the environment. Many staff reported greater collaboration and team work this year and 76% said they enjoy working for Watercare.

The survey also identified areas for improvement: a more consistent and transparent remuneration framework; better management of change; and better alignment of objectives and performance across departments. We have recruited a remuneration specialist who will help us to, over the coming year, develop a remuneration framework that is both fair and competitive.

We would like to thank our people, management and the board for their contribution during the year. It has been a positive, exciting and challenging time which has positioned the company well for the future. We are looking forward to the next stages of the Watercare journey.

 

Margaret Devlin Sig copy     sign R P Jaduram

Margaret Devlin and Raveen Jaduram