|The Board maintains a formal process for evaluating the Chief Executive Officer’s performance. The formal evaluation is based on specific criteria, including the Corporation’s business performance, the extent to which longer-term strategic objectives are being achieved and the development of the Corporation’s people at all levels of the organisation. This assessment is structured and conducted by the Board and encompasses the requirements under the GBE Act.
The Board uses methods for continuous improvement of its processes. A method introduced this reporting period is for the Corporation Secretary to provide qualified advice on its reporting structure and process. The Board conducts a continuous ‘self assessment’ of its operations, including a critique at the conclusion of each Board meeting.
In December 2006, a formal 360-degree assessment was conducted by an external consultant as an additional check on the continuous improvement process of Board procedures and practices. It did not assess performance outcomes.
Information relating to Board appointments, conflict of interest, shareholder oversight and remuneration is on Hydro Tasmania’s website.
Board and executive remuneration
Remuneration for directors is determined by the Government and recommended to the Governor of Tasmania on appointment of directors. All executives, including the CEO, receive a salary package that incorporates an at-risk component. This component is based on performance criteria relating to safety and financial performance and operational, environmental and social criteria as relevant to their role. No departure arrangements are made other than normal redundancy payments.
In response to staff criticism in the 2006 Staff Feedback Survey about bureaucratic processes, a new Policies and Practices Framework was introduced for assessing, writing and adopting policies and procedures.
The framework embeds ethical behaviour and values-based decision-making into policies and simplifies, clarifies and applies a consistency to the process. Approval and implementation will occur in 2007/08.
Current certified management systems include:
- Environment and Sustainability Management System (ESMS)
- Consulting Quality System
- NATA High Voltage Testing Facility.
During the reporting period, the internal audit, risk and compliance functions were consolidated to form the Assurance Group.
The Manager Assurance Group oversees performance in relation to all compliance obligations. This role reports to the General Manager Corporate Governance on an administrative basis and has direct access to the Board.
The compliance program continued to be extended throughout the business this year. Interim compliance plans for each group of the new structure specify compliance obligations, obligations to review, systems in place and actions required. Adjustments to the plans are being made that align with the new organisational structure.
Hydro Tasmania’s compliance obligations relate to trading, electricity generation, environment, safety, water management and corporate services. They include the regulatory requirements of Australian Securities and Investments Commission (ASIC) and the National Electricity Market (NEM), covering financial services, risk management, reporting structures and compliance breaches. The annual compliance audit included a scan for risks relating to corruption for each business unit.
The Australian Financial Services Licence audit by KPMG was incomplete at the end of the reporting period, but general findings were that the current AFSL compliance plan has satisfactory coverage, improvements under way were noted and further improvements were recommended.
The Environment and Sustainability Management System (ESMS), which is certified ISO14001, was audited in accordance with Hydro Tasmania’s internal and third party auditing schedule. No external non-conformance reports (NCR) were raised.
There were no legal actions for anti-competitive behaviour, anti-trust and monopoly practices in the reporting period.
Hydro Tasmania recorded 50 breaches of compliance obligations during the year. The breaches were in the categories of Environment, Workplace Standards, National Electricity Rules, AFS Licence, GBE Act and other legislation, and include internal policy and procedural breaches. None of the breaches related to either discrimination or regulations and voluntary codes concerning marketing communications. Twenty-five instances related to legislative, regulatory or licence breaches. In all instances the regulatory authorities were notified and no notices or fines were issued.