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Metropolitan Fire and Emergency Services Board

ANNUAL REPORT 2013–14

MFB ANNUAL REPORT

2013–14

OUR VISION

A safer and

more resilient

community.

OUR MISSION

Protection of life,

property and the

environment.

OUR GOALS

• Engage our people

• Build a safer community

• Achieve organisational excellence

2 Vision, mission and goals

3 Letter to the Minister

4 President’s foreword

5 Chief Executive Ofﬁcer’s report

6 About us

10 The Board

12 Executive leadership team

13 Organisational structure

14 Our performance

17 A challenging ﬁre season

19 MFB in the community

22 MFB partners

24 MFB people

29 Innovation and efﬁciency

32 Corporate governance statement

39 Financial report

MFB Business Plan 2014–15 1

LETTER TO THE MINISTER

CONTENTS

MFB Annual Report 2013–14 3

Front and back covers: hot ﬁre training at the VEMTC.

Inside cover: Aerial view of VEMTC.

The Hon. Kim Wells MP

Minister for Police and Emergency Services

Level 16, 121 Exhibition Street

Melbourne VIC 3000

Dear Minister,

I have much pleasure in submitting the 2013–14

Annual Report of the Metropolitan Fire and Emergency

Services Board in accordance with the Financial

Management Act 1994 (Vic).

Yours sincerely

Neil Comrie AO, APM

President

Date: 1 September 2014

In years to come when we look back on

the summer of 2013–14 we may well

view it as the turning point where the

philosophy of an all hazards all agency

approach to emergency management

in Victoria started to take hold.

This year further galvanised MFB and

conﬁrmed the challenges it faces. It also

reinforced the need to continue to reform the

organisation as major changes occurred.The

new Fire Services Levy has for the ﬁrst time

made MFB directly accountable to the public

for the services we deliver and the way these

are resourced. This is a positive change for the

sector and the community and will help drive

reforms and efﬁciencies in MFB.

MFB has continued to deliver world class

response times and ﬁrst responder actions.

MFB is determined to maintain this level

of service delivery, while also increasing its

support outside the metropolitan district.

I am proud of MFB’s achievements over

the summer ﬁre season, but at the same

time I know MFB must become a more agile

and ﬂexible organisation to deal with the

changing needs of emergency management

in Victoria. Change can be difﬁcult, but it

will ensure that the organisation reaches its

full potential, ultimately making the Victorian

community safer.

To that end MFB is examining many areas of

its operations. This includes how we deploy

people and appliances, and lateral entry of

experienced and qualiﬁed staff from other

emergency services into the organisation.

Flexible working arrangements and ﬁt for

work standards are being pursued through

negotiations for new enterprise agreements.

MFB’s levels of unplanned leave continue

to be of concern. The Strategy Planning

and Resources Committee of the Board is

monitoring the implementation of a plan to

address this issue.

MFB is also facing the challenges associated

with an ageing workforce and managing the

change required to create the next generation

of leaders. The Victorian Emergency

Management Training Centre at Craigieburn

is now complete and it is an exciting

development. The centre is a state-of-the-art

facility which supports sector aims to provide

high-quality training to enhance the safety of

our people and the wider community.

MFB will be operating this facility on behalf

of the State. The facility will provide training

not only for MFB ﬁreﬁghters, but also for

thousands of emergency service personnel

from the CFA, Victoria Police, Ambulance

Victoria, Department of Environment and

Primary Industries and the State Emergency

Service. It will quickly become a showpiece

for specialist skills development and the

proving ground for many of the State’s future

emergency management leaders.

I would like to take this opportunity to welcome

MFB’s new Chief Executive Ofﬁcer, Jim

Higgins, who brings a wealth of experience in

emergency management to the role. I would

also like to thank Nick Easy, MFB’s previous

Chief Executive Ofﬁcer. Nick made a signiﬁcant

contribution to the organisation during a time

of major change and transition.

This year we also farewelled Alf Long who

left the Board after three years of service.

I thank Alf for his strong input to the

governance of the organisation. In addition,

the Board welcomed two new members:

Stuart Alford and Therese Ryan.

Although MFB faces many challenges,

the changes being implemented and our

work to date with our partners to improve

interoperability stand the organisation in good

stead. MFB is on track to deliver even more

effective emergency management services to

the Victorian community in the future.

Neil Comrie AO, APM

President

PRESIDENT’S

FOREWORD

4MFB Annual Report 2013–14

THE NEW FIRE

SERVICES LEVY

HAS FOR THE

FIRST TIME MADE

MFB DIRECTLY

ACCOUNTABLE TO

THE PUBLIC FOR

THE SERVICES WE

DELIVER AND THE

WAY THESE ARE

RESOURCED.

Neil Comrie AO, APM

President

While new to MFB, I am impressed

with the passion and determination of

MFB’s people. Their performance during

a challenging summer ﬁre season is

commendable, particularly as it was

achieved without a reduction in the

quality of services provided within the

metropolitan district.

MFB maintained a strong leadership role this

year during emergencies, especially in our

growing work with the State Control Centre

and incident and regional control centres.

Once again the organisation delivered more

services in regional Victoria, in particular in

Morwell and interstate in New South Wales.

Our participation in major incidents outside

Melbourne reinforce the importance of the

emergency services reform agenda and MFB’s

commitment to evolve to meet those changes.

Under the sector’s three-year Reform Action

Plan both the types of services and the

way they are delivered by MFB is changing

dramatically. This includes providing state-

wide coverage in areas such as hazardous

materials. In addition, Emergency Management

Victoria’s goals and strategic themes require

MFB to meet new service delivery standards.

This will be challenging for MFB and our

partners, but ultimately it will ensure enhanced

and borderless emergency management.

The organisation is increasingly seeking

innovative and collaborative solutions to

emergency management. MFB delivers

specialist urban ﬁreﬁghting, emergency

response and rescue services and emergency

medical response. Notwithstanding the

signiﬁcant demands generated by a very

busy ﬁre season, MFB performed very well in

terms of response times and ﬁre containment

in 2013–14. This is particularly impressive

given the large program of change currently

being undertaken by the organisation and the

extreme ﬁre conditions over the summer.

In order to fulﬁl its vision, MFB works to build

the community’s capacity to respond to ﬁres

and recover after ﬁres occur. This involves

engagement and prevention activities. MFB

also works closely with communities that

are particularly vulnerable. MFB is becoming

more sophisticated about the design

and implementation of its prevention and

engagement activities, drawing on research

and striving to innovate.

This year MFB delivered the Victorian

Emergency Management Training Centre at

Craigieburn in partnership with Major Projects

Victoria, on time and to budget. This world-

class facility was ofﬁcially opened in June

by the Victorian Premier Dr Denis Napthine,

alongside Minister for Police and Emergency

Services and Minister for Bushﬁre Response

Kim Wells and Minister for Major Projects

David Hodgett.

This $109 million training facility will give

emergency services personnel access to

highly-specialised ﬁre and emergency training

facilities, enhancing the sector’s ability to

support a state-wide shift towards to an

‘all hazards, all agencies’ approach to

emergency management.

The 12 training props on site which simulate a

range of real life situations, including major ﬁres,

road accidents, petrochemical ﬁres, ship board

incidents and urban search and rescue. These

realistic scenarios are tailored to Melbourne’s

unique urban landscape, and include lane ways,

rail tunnels and tram stops with ﬁre, smoke,

sound and physical obstacles.

They will be an invaluable tool in building

Victoria’s emergency service capacity to

respond to ﬁre, hazmat and rescue incidents.

Behind the scenes, MFB has begun major

work on information and communication

systems to improve our capacity and to

support interoperability with other emergency

management organisations. MFB’s Information

Management Strategic Plan is guiding

investment in information technology.

In order to support change, MFB embarked

on a major program of organisational and

leadership development. Based on employee

feedback we have established frameworks

and processes to create people centered

management of change. Negotiations for new

operational enterprise agreements continue

with MFB focused on achieving a modern

enterprise award agreement that will unlock

the organisation’s potential and continue to

provide competitive pay and conditions for

our valued employees.

As we progress this cultural change and

release our potential, safety will remain the

organisation’s number one priority. We will

continue to develop and improve safety

measures to identify and manage risks. We

will ensure that as we respond effectively to the

challenges of emergency management reform,

no compromises are made to staff safety or

that of the people we serve and protect.

I would like to thank all our employees for

their work throughout the year. It has been an

honour to be appointed the Chief Executive

Ofﬁcer of MFB. We have much more work to

do and our Board, our employees, and our

partners have the knowhow and commitment

to achieve our goals so we can better serve

the Victorian community.

Jim Higgins ASM

Chief Executive Ofﬁcer

CHIEF EXECUTIVE

OFFICER’S

REPORT

MFB Annual Report 2013–14 5

WE WILL CONTINUE

TO DEVELOP AND

IMPROVE SAFETY

MEASURES TO

IDENTIFY AND

MANAGE RISKS.

WE WILL

ENSURE THAT

AS WE RESPOND

EFFECTIVELY TO

THE CHALLENGES

OF EMERGENCY

MANAGEMENT

REFORM NO

COMPROMISES ARE

MADE TO STAFF

SAFETY OR THAT

OF THE PEOPLE WE

SERVE AND PROTECT.

Jim Higgins ASM

Chief Executive Ofﬁcer

WHAT WE DO

MFB’s 2,197 employees help safeguard almost

four million Melbourne residents, workers and

visitors along with assets and infrastructure

worth billions of dollars. Our day-to-day service

covers the metropolitan district, an area of over

1,000 square kilometres. However, our ﬂeet

and personnel can be called on to support

emergency management anywhere in Victoria.

MFB delivers ﬁre and emergency

management services, and drives systemic

change to the built environment through

reforms to building design, regulations and

legislation. MFB also invests in research and

develops prevention programs that improve

community safety and build resilience. In

addition, specialist operational support is

provided across Australia and the Asia Paciﬁc

region as required.

OUR VALUES

MFB aims for continuing, measurable

improvement in our workplace culture. MFB:

• works in a highly professional manner

• strives for a workplace culture of safety;

identifying and remedying the causes of

workplace injuries

• is responsive to the needs of our people

and our community

• demonstrates initiative, innovation and

agility as we continuously improve our

services.

MFB upholds the Victorian Government Public

Sector Values:

• responsiveness

• respect

• integrity

• leadership

• impartiality

• human rights

• accountability.

ABOUT US

6MFB Annual Report 2013–14

MFB’S 2,197

EMPLOYEES HELP

SAFEGUARD ALMOST

FOUR MILLION

MELBOURNE

RESIDENTS,

WORKERS AND

VISITORS ALONG

WITH ASSETS AND

INFRASTRUCTURE

WORTH BILLIONS

OF DOLLARS.

MFB strike teams working with

CFA and DEPI in the Stawell and

Halls Gap area.

OUR WORK

MFB’s work covers prevention, preparedness,

response and recovery.

Prevention

MFB aims to eliminate or reduce the incidence

or severity of emergencies. We work with the

community, partner emergency management

agencies, government agencies, peak

bodies and the private sector to create the

knowledge, behaviours, and regulatory

frameworks that will protect life, and minimise

injury and damage to assets.

Preparedness

MFB works to ensure that individuals and

communities are able to prevent and respond

effectively to emergencies. This includes:

putting response plans and arrangements

in place, conducting assessments of the

likelihood and severity of risks, planning for

the continued availability of essential services,

and identifying ways to mitigate the potential

impacts of an emergency.

Response

When MFB is dispatched to incidents we work

to minimise their impact and provide affected

individuals and communities with immediate

relief and support. We respond to around

36,500 calls a year covering ﬁres, hazardous

incidents, automatic alarms, road accidents,

medical emergencies, urban search and

rescue and marine incidents. See Figures 1

and 2.

Recovery

MFB supports emergency-affected individuals

and communities and aims to restore

emotional, social, economic and physical

wellbeing. We work with our partners to

ensure that the community and its resources

are protected and maintained following an

incident.

ABOUT US continued

MFB Annual Report 2013–14 7

Figure 1: Number of

MFB calls attended

2003–04 to 2013–14

Number of calls

Trend line

Figure 2: Breakdown of calls

attended by type of incident

(metropolitan district)

2003–04 to 2013–14

Average 2003–04 to 2012–13

2012–13

2013–14

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14

40000

35000

30000

25000

20000

15000

10000

5000

31591

31161

33081

36364

35673

35706

33489

34447

35140

36059

36671

16000

14000

12000

10000

8000

6000

4000

2000

Fires and

explosions

Hazardous

conditions

(not a ﬁre)

Emergency

medical

response

Rescues and

other medical

assistance

Service

calls

False alarms

and false calls

(incl. good intent)

Other

situations

2000

4000

6000

8000

10000

12000

14000

16000

8142

8835

7382

3300

3366

3391

4008

2564

4803

2820

3327

3482

1320

1211

1360

14622

14502

14659

126

136

137

AIRS data was affected by industrial

bans Sep 05, Jan–Mar 06, Oct 02 (this does

not affect the total number of incidents reported

but disaggregation is not possible)

WHERE WE WORK

MFB delivers most of its services in the metropolitan district – a two-region, ﬁve-district area –

and operates 47 stations across 26 local government areas. Our structural arrangements are

aligned to state government regional boundaries. This enables us to work cohesively with local,

regional and state partners, planning, controlling and coordinating responses to incidents under

the state emergency management arrangements. It is also the platform for integrated emergency

management planning at the local, municipal, regional and state level.

Our regional model supports MFB’s role in the State Control Centre, with regional controllers

from all agencies working together on emergencies in their areas of responsibility.

ABOUT US continued

8MFB Annual Report 2013–14

The metropolitan district and

the MFB regional and district

structure

•

Tullamarine

(FS52)

•

Broadmeadows

(FS5)

•

Somerton

(FS9)

•

Epping

(FS11)

•

Thomastown

(FS7)

•

Bundoora

(FS14)

Greensborough

•

(FS16)

•

Hawthorn

(FS18)

•

Box Hill

(FS20)

•

Burwood

(FS23)

Vermont South

(FS28)

•

Nunawading

(FS27)

•

Ringwood

(FS22)

•

Croydon

(FS26)

•

Glen Waverley

(FS31)

•

Oakleigh

(FS25)

•

Malvern

(FS24)

•

Ormond

(FS32)

•

Windsor

(FS35)

•

Port Melbourne

(FS39)

Brunswick

•

(FS4)

•

Highett

(FS34)

•

Clayton

(FS29)

•

Mentone

(FS33)

•

Pascoe Vale

(FS6)

•

Preston

(FS12) Heidelberg

•

(FS15)

•

Northcote

(FS13)

Templestowe

•

(FS30)

North Balwyn

•

(FS19)

Northern

District

Eastern

District

Southern

District

•

Taylors Lakes

(FS48)

•

Newport

(FS42)Altona

•

(FS46)

•

Laverton

(FS40)

•

North Laverton

(FS49)

•

Deer Park

(FS43)

Sunshine

•

(FS44)

•

St Albans

(FS41)

•

Keilor

(FS51)

Footscray

•

(FS47)

Ascot Vale

(FS50)

•

Spotswood

(FS45)

•

NORTH

WEST

METRO

Western

District

•

Richmond

(FS10)

•

Eastern Hill

(FS1)

Carlton (FS3)

•

West Melbourne

•

(FS2)

South Melbourne

(FS38)

•

Central

District

SOUTH

EAST

METRO

ABOUT US continued

MFB Annual Report 2013–14 9

6500

6000

5500

5000

4500

4000

3500

3000

2500

2000

1500

1000

500

Melbourne

Central Eastern Northern Southern Western CFA

Yarra

Boroondara

Monash

Whitehorse

*Greater Dandenong

*Knox

*Maroondah

*Manningham

*Yarra Ranges

Darebin

Moreland

*Banyule

*Hume

*Whittlesea

*Nillumbik

Port Phillip

Bayside

Glen Eira

Stonnington

*Kingston

Brimbank

Hobsons Bay

Maribyrnong

Moonee Valley

*Melton

*Wyndham

*Other areas

4875.0

5687.5

6500.0

Figure 3: Number of calls by

LGA (MFB and CFA areas)

2003–04 to 2013–14

Average 2003–04 to 2012–13

2012–13

2013–14

Note: This chart shows all calls attended

by MFB. LGAs crossing the metropolitan

district boundary are denoted by a star (*).

MFB crews on board Fireboat 1

on Port Phillip Bay.

Neil Comrie AO, APM

President

Appointed President June 2010

Neil brings to MFB signiﬁcant emergency

management experience. A career police

ofﬁcer, Neil joined Victoria Police in 1967

and, after serving initially in uniformed and

specialist roles, in 1990 he was appointed

Assistant Commissioner, Queensland Police

Service. In 1993, Neil was appointed as the

eighteenth Chief Commissioner of Victoria

Police. He retired in 2001. Neil is currently the

Independent Monitor for the implementation

of the recommendations of the Victorian

Bushﬁres Royal Commission and he was also

appointed as Chair, Review of the 2010–2011

Flood Warning and Response – Victorian

Floods Review. He has undertaken various

sensitive and signiﬁcant inquiries and projects

on behalf of the Commonwealth and Victorian

Governments, and internationally.

Ken King

Deputy President

Appointed July 2008,

appointed Deputy President July 2011

Ken served as a member of the Country Fire

Authority Board from 2003 to 2012, and

retired recently from a long and very successful

career in the Department of Sustainability

and Environment (DSE). Ken has held senior

positions in land management, forestry and

bushﬁre management, including as the DSE’s

Regional Manager for northwest Victoria,

South Gippsland and the Port Phillip area

which covers metropolitan Melbourne. Ken

serves on the boards of the Natural Resources

Conservation League, the Bjarne K Dahl Trust

and the Habitat Melbourne Trust.

Jay Bonnington

Board Member

Appointed July 2006

Jay is a chartered accountant and has

worked overseas, with the Transﬁeld Group

in Australia, and as CFO/Finance Director of

Yallourn Energy Ltd, and NEMMCO. She then

moved into ﬁnancial services and became

CEO of a not for proﬁt. She now serves

as a professional non-executive company

director on a number of boards, including

St. John of God Healthcare Group, HESTA

Superannuation and Utilities Trust of Australia.

In addition, she serves on several community

boards, including Deakin University Council,

the Lord Mayor’s Charitable Foundation, and

the Audit Committee of the Salvation Army’s

Southern Territory.

John Lord AM

Board Member

Appointed July 2011

John has had high proﬁle careers in the Royal

Australian Navy, the Commonwealth and

state public sectors, and private enterprise.

In recent years he has provided strategic

planning advice and corporate governance

to the commercial sector, specialising in

international relations, government business,

and the maritime industries. He served with

the Royal Australian Navy for over 36 years

and retired with the rank of Rear Admiral. He

is a former Chief Executive and director of the

Marine Board of Victoria where he initiated

several state and national maritime programs.

He was also a member of the Australian

Maritime Group and the National Plan

Committee for maritime emergency responses

around Australia. John is presently Chairman

of Huawei Technologies Australia and the

Victorian Veterans Council. He is also member

of the Defence Council Victoria, the Ministerial

Advisory Committee for Corrections, and a

Director of the Defence Bank Foundation Trust.

Stuart Alford

Board Member

Appointed September 2013

Stuart joins MFB following a distinguished

career as a chartered accountant having

worked for international accounting ﬁrm

Ernst and Young for 40 years, including 27

years as a partner. He is currently Chair of

the Centre of Excellence for Intervention and

Prevention Science Limited, a board member

of Eastern Health; Eastern Health Foundation,

and Kilvington Grammar. Stuart is also an

Audit Committee Member of the Victorian

Curriculum and Assessment Authority; Chair

of the Audit Committee, Australian Accounting

Standards Board, and Chair of the Audit

Committee, Auditing and Assurance Standards

Board. Stuart is a fellow of the Institute of

Chartered Accountants in Australia and a

member of the Australian Institute of Company

Directors.

THE BOARD

10 MFB Annual Report 2013–14

Therese Ryan

Board Member

Appointed August 2013

Therese is an experienced professional and

non-executive director, who has worked

across a diverse range of industries. She is

a non-executive director of Burson Group

Limited, Victorian Managed Insurance

Authority, VicForests and Yarra Valley Water.

She is also an independent member of the

audit committee of the City of Melbourne and

Chair of the Advisory Committee for the Ofﬁce

of Correctional Services Review. Until recently,

she was also Chair of Good Shepherd Youth

and Family Services and Fitted for Work and

a non-executive director of Good Shepherd

Microﬁnance. In her last senior executive role

in General Motors, Therese, was a member of

the senior leadership team for its international

operations, as well as General Counsel. She

lived and worked in China for four years,

leading a team delivering projects not only in

China but across the globe, including India,

Korea, Latin America, Africa, the Middle East

and Eastern Europe.

David Purchase OAM

Board Member

Appointed July 2011

After graduating with a law degree from

Melbourne University, David spent 15 years

at the Victorian Employers Federation, and

was appointed Deputy Executive Director. In

1986 David was appointed Executive Director

of the Life Insurance Federation of Australia,

the representative body for life insurance

companies. In 1994 he joined Norwich

Union Financial Services Limited as Group

Company Secretary and in 1995 became

General Manager of Lifescreen Australia Pty

Ltd (a subsidiary company of the Norwich

Group). David joined the Victorian Automobile

Chamber of Commerce (VACC) as Executive

Director in 1997. He also sits on the boards

of MotorTradeCard Pty Ltd, Motor Industry

Holdings Limited, Motor Industry House Pty

Limited, and is a panel member of the Winston

Churchill Memorial Trust Committee.

Alfred Long

Board Member (retired from the Board

on 13 September 2013)

Appointed 14 September 2010

Throughout an impressive 44-year career

with the Commonwealth Bank of Australia, Alf

worked in four states. Following a cadetship

in his early years he worked in branch

management then undertook positions in

the corporate banking arena where he was

later appointed General Manager. He was

appointed State Manager, Queensland and

four years later returned to Victoria as General

Manager to implement the merger of CBA and

The State Bank of Victoria. In 1997 he became

head of the Customer Service Division,

managing the CBA’s extensive distribution

network and its 28,000 employees across

Australia. Alf retired from the CBA in July

2000. His capacity to draw people together

and to resolve complex organisational issues

complements the skills on the MFB Board.

THE BOARD continued

MFB Annual Report 2013–14 11

EXECUTIVE

LEADERSIP TEAM

12 MFB Annual Report 2013–14

MFB comprises seven directorates and an

ofﬁce supporting the CEO. The Executive

Director Emergency Management is

usually also Chief Ofﬁcer. However, the

roles were managed by two Deputy Chief

Ofﬁcers from December 2013 to May

2013 while MFB sought to appoint a

new Chief Ofﬁcer.

Chief Executive Ofﬁcer

Jim Higgins ASM commenced as CEO

on 28 April 2014. He joins MFB from the

Victorian Department of Human Services

and was previously the Commissioner of the

Queensland Ambulance Service, where he

worked for 13 years.

Chief Ofﬁcer

Peter Rau was appointed Acting Chief Ofﬁcer

in December 2013 and was formally appointed

to the role on 29 May 2014. He has over

30 years’ experience in ﬁre and emergency

management with the CFA and MFB.

Executive Director Emergency

Management

Assistant Chief Fire Ofﬁcer Adam Dalrymple

(Acting)

Executive Director People and Culture

Danielle Byrnes

Executive Director Corporate Services

Russell Eddington

Executive Director Property and Assets

Craig Lloyd

Executive Director Strategy and

Innovation

Neil Hubbard (Acting)

Executive Director Organisational

Learning and Development

Acting Deputy Chief Fire Ofﬁcer David Bruce

Regional Director North West Metro

Region

Deputy Chief Ofﬁcer David Youssef

Regional Director South East Metro

Region

Acting Deputy Chief Ofﬁcer Andrew Zammit

Lead Executive Operations Enterprise

Agreement

Deputy Chief Ofﬁcer Paul Stacchino

MFB appliances and the Erickson

Air Crane in Stawell.

ORGANISATIONAL

STRUCTURE

MFB Annual Report 2013–14 13

Emergency

Management

(Chief Ofﬁcer)

North West

Metro Region

South East

Metro Region

Ofﬁce of

the CEO/

Corporate

Governance

EA Project

Property

and Assets

People

and Culture

Corporate

Services

Strategy and

Innovation

Organisational

Learning and

Development

Ofﬁce of the

Chief Ofﬁcer

Regional

Operations

Regional

Operations

Property

Services

Human

Resources Finance

Corporate

Strategy and

Performance

Victorian

Emergency

Management

Training Centre

Community

Resilience

Community

Resilience

Community

Resilience Fleet Workplace

Relations

Records

Management

Corporate

Relations

Operational

Training

Development

and Delivery

Health and

Safety

Health and

Safety

Health and

Safety

Mechanical

Services

Business

Assurance

Corporate

Sustainability

Special

Operations

Capability

Improvement

Learning and

Development

Learning and

Development

Operational

Equipment

Fire

Equipment

Services

Fire Safety

Infrastructure

and Regional

Projects

Infrastructure

and Regional

Projects

Project

Management

Ofﬁce

Procurement

Regional

Fire Safety

Information and

Communication

Services

OPERATIONS SUPPORT SERVICES

CEO

BOARD

OUR

PERFORMANCE

14 MFB Annual Report 2013–14

The Victorian Government Budget Papers

set targets for emergency management

organisations and MFB is committed

to the achievement of these goals. This

forms part of the Department of Justice’s

contribution to the ﬁre and emergency

services output group. Table 1 shows

MFB’s performance against measures in

Budget Paper 3. It should be noted that

the counting rules for statewide measures

differ from those used to report internally

by MFB.

MFB sets additional performance measures

to those outlined in Budget Paper 3 in

our Strategic and Business Plan 2011–14

(see Table 2). The measures provide MFB

metrics for areas of emergency response

and corporate performance not included

in Budget Paper 3. These metrics reﬂect

other areas where continuous improvement

principles apply. Work was undertaken in the

last ﬁnancial year to review MFB’s metrics

and a new set of KPIs have been developed

that align to new sector goals. These will be

implemented in the 2014–2015 ﬁnancial year.

Major outputs and deliverables

Performance measures

Unit of

measure

2013–14

State

target

2013–14

MFB

target

2013–14

MFB

actual

Quantity

Permanent operational staff number 2,732 1,845 1,859

Permanent support staff number 1,430 356 338

Quality

Road crash rescue accredited brigades/units number 130 5 5

Level 3 incident controller trained staff and

volunteers

number 129 76 82

All structural ﬁres contained to room or object

of origin

per cent 80 90 91

Timeliness

Emergency response times meeting

benchmarks (All structural ﬁres)

– Budget Paper 3

per cent 90 90 89

Emergency response times meeting

benchmarks (Road accident rescues)

– Budget Paper 3

per cent 90 90 89

Emergency response times meeting

benchmarks (Emergency medical response)

– Budget Paper 3

per cent 90 90 95

Table 1: Emergency

management capability

Budget Paper 3 performance

measures are statewide measures

and are targets that combine CFA

and MFB in relation to ﬁre-related

KPIs or CFA, MFB and SES in

relation to road rescue.

OUR

PERFORMANCE continued

MFB Annual Report 2013–14 15

Table 2: MFB performance

measures

* This is the 90th percentile

response time of rescue

vehicles. It excludes normal

road conditions and calls

outside the metropolitan

district.

# CFA calls – services provided

by MFB into CFA areas as part

of our mutual aid agreement.

^ Percentage of rostered staff

actually available for duty

regardless of the reason

for absence (01/07/13 to

16/05/14).

Figure 4: Containment of structure

ﬁres to the room of origin

2003–04 to 2013–14

Contained to room of origin

– all building ﬁres1

Contained to room of origin –

excluding ﬁres in buildings conﬁned

to non-combustible containers2

1. MFB performance measure; target is

90 per cent.

2. Budget Paper 3 performance measure

determined by Government; target is

80 per cent.

Major outputs/deliverables

Performance measures

Unit of

measure

2013–14

target

2013–14

outcome

2012–13

outcome

KPI 1 Structure ﬁres contained to room of

origin (BP3 deﬁnition)

per cent Both building

and structure

ﬁres 90

86.5

(building)

90.5

(structure)

86.9

(building)

KPI 2 Emergency response times –

structure ﬁres (90th percentile)

minutes 7.7 7.8 7.6

KPI 3 Emergency response times –

road accident rescue response

(90th percentile) *

minutes 13 14.4 13.4

KPI 4 Emergency response times –

emergency medical response

(90th percentile)

minutes 9.2 8.3 8.2

KPI 5 Reduce the number of structure ﬁres

per year by 5 per cent

number <3,000 2,951 3,183

KPI 6 Minimise residential structure ﬁres per

year with no smoke alarm present

per cent <12 13.6 12.9

KPI 7 Active level 1 projects classiﬁed

as ‘on track’ as at 30 June 2014

per cent 90 74 47

KPI 8 Calls for assistance (000) #per cent 100%

requests met

100%

36,671 calls

100%

36,059 calls

KPI 9 Preventable ﬁre fatalities number 0 5 4

KPI 10 On-shift staff availability ^per cent 95 87.2 87.4

100%

80%

60%

40%

20%

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14

90.1

87.9

90.0

87.7

90.7

88.2

89.3

86.6

88.9

86.2

90.9

88.7

90.6

86.9

91.2

87.5

90.6

86.7

90.8

86.9

90.5

86.5

Target 90%

100

Structure ﬁre Non-structure ﬁre Incidents Hazardous material

MFB SERVICE DELIVERY

In the 2013–14 year MFB attended

36,671 calls in the metropolitan district

and a number of major bushﬁre and

grassﬁre incidents outside the district.

There were ﬁve preventable ﬁre-related deaths

in 2013–14, compared with four in 2012–13

and the 10-year average of 6.1 preventable

fatalities per year (see Figure 6).

The emergency medical response (EMR)

program responded to more than 4,803

medical calls and provided medical assistance

3,400 rescues and other medical incidents in

2013–14.

MFB has now performed 163 services with

deﬁbrillators. MFB EMR is now included in

the State Health Response Plan and MFB’s

summer surge capacity helped Ambulance

Victoria during the heatwave.

A number of incidents required a large initial

MFB response and a prolonged allocation

of resources, including clean-up and site

monitoring. Figure 7 highlights the type and

number of major incidents classed as third

alarm and above or equivalent. A ﬁrst alarm

incident normally involves two appliances; a

ﬁfth alarm involves specialist appliances and

senior command.

OUR

PERFORMANCE continued

16 MFB Annual Report 2013–14

Figure 6: Preventable ﬁre

related fatalities

2003–04 to 2013–14

* Preventable ﬁre fatalities are deﬁned

as all fatalities, excluding murder,

suicides and where the ﬁre was

not the cause of death.

Figure 7: Types of major

incidents third alarm and

above in the metropolitan

district 2013–14

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14

Figure 5: Emergency response

times meeting benchmarks

2003–04 to 2013–14

Internal response time benchmarks apply to a

broader range of responses (all emergency calls)

than the Budget Paper 3 benchmarks.

100%

80%

Target 90%

60%

40%

20%

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14

100

89.7

87.4

86.4

85.3

85.4

83.8

84.1

87.3

88.1

88.4

87.9

The 2013–14 summer tested Victoria’s

emergency management arrangements.

Agencies responded to multiple

incidents statewide as well as interstate.

Contributing resources, such as

command staff, ﬁreﬁghters, administrative

staff, appliances and equipment, MFB

proved to be a borderless organisation.

The summer also highlighted that despite

differing capabilities and doctrines,

we integrated seamlessly with sector

colleagues from around Australia.

NEW SOUTH WALES

DEPLOYMENTS

MFB sent its largest deployment in recent

times to NSW to backﬁll stations in

metropolitan Sydney, easing the pressure

on crews battling the Blue Mountains

blaze. Ten pumpers crewed with 40 staff,

mechanics and command staff left for

Sydney in October 2013.

While other Victorian agencies sent crews

to the bushﬁres, MFB’s appliances were

stationed throughout Sydney. This allowed

deployments of crews made up of two MFB

and two Fire and Rescue NSW ﬁreﬁghters.

The crews undertook station brieﬁngs,

interagency drills, turnout area inspections,

and tested equipment compatibility. They also

assisted with the SABRE program (smoke

alarm battery replacement for the elderly).

While MFB had previously sent strike teams

interstate this was the ﬁrst time appliances

were deployed. The crews attended more

than 60 ﬁre calls. Fire and Rescue NSW

Commissioner Greg Mullins visited MFB crews

to personally thank them for their service.

COMMAND ROLES

Over summer MFB senior command staff

played a crucial role in state and regional ﬁre

management. MFB’s Chief Ofﬁcer was based

at the State Control Centre for the summer

as one of the Deputy State Controllers, while

MFB senior command staff rotated through

the role of State Duty Ofﬁcer. Senior command

also rotated through the role of regional

controller for the Craigieburn (Hume Freeway

complex), Mickleham and Hazelwood ﬁres.

This was the ﬁrst time that MFB staff worked

in a truly integrated way with other emergency

management personnel at all levels of incident

control – from the State Control Centre to

the ﬁreground.

HEATWAVE

In January 2014 there were four consecutive

days above 40°C and triple the number of call

outs compared to the previous year. To help

other Victorian agencies, including the CFA,

the Department of Environment and Primary

Industries (DEPI), and Ambulance Victoria,

MFB commissioned extra appliances and

increased the number of response crews.

MFB also:

• allocated day workers to operational

appliances during the day

• enabled rapid impact assessment and

strike teams for deployment in Geelong,

Ballarat, Stawell, Mildura and Ouyen

• deployed nine new Mk5 pumper and

pumper tanker appliances

• had corporate staff working in the State

Control and Incident Control Centres.

A CHALLENGING

FIRE SEASON

MFB Annual Report 2013–14 17

MFB crews deployed to Sydney

in October 2013.

MFB SENT

ITS LARGEST

DEPLOYMENT IN

RECENT TIMES TO

NSW TO BACKFILL

STATIONS IN

METROPOLITAN

SYDNEY, EASING

THE PRESSURE ON

CREWS BATTLING

THE BLUE

MOUNTAINS BLAZE.

HUME FREEWAY COMPLEX AND

REGIONAL DEPLOYMENTS

On the morning of 17 January 2014 MFB

responded to multiple ﬁres along the Hume

Freeway. The ﬁres were in both CFA and MFB

areas and the incident quickly escalated into a

ninth alarm ﬁre involving MFB, the CFA, DEPI

and air support. Transfer of control was made

to the Gisborne Incident Control Centre under

the arrangements put in place by the Fire

Services Commissioner.

This was the ﬁrst time MFB had transferred

control of an incident to a remote control

centre and one of the ﬁrst tests of the MFB’s

application of transfer of control. MFB, CFA

and DEPI crews worked together to bring

these challenging ﬁres under control and the

MFB Control Unit performed a crucial role in

establishing a divisional command point to

direct resources.

More than 385 ﬁre agency personnel were

involved in this incident, on a day when

351 calls were responded to across various

incidents. On the same day MFB sent

considerable resources to Stawell and

Halls Gap where bushﬁres were threatening

both towns.

THE WORST FIRE DANGER DAY

SINCE 2009

9 February 2014 was the worst ﬁre danger day

Victoria had experienced since Black Saturday.

MFB attended many grass and scrub ﬁres

around Melbourne, including major incidents

in Greensborough, Fawkner and Keilor that

threatened homes and industrial areas. MFB

crews also assisted CFA and DEPI crews in

combating the Mickleham and Warrandyte

ﬁres where homes were destroyed. In total

MFB responded to 327 calls.

HAZELWOOD MINE FIRE

In Gippsland on 9 February CFA ﬁre crews

were called to the Strzelecki Highway between

Morwell and Mirboo North where a ﬁre quickly

moved through a timber plantation, before it

spread into the Hazelwood mine, starting a

major coal ﬁre.

The following day MFB sent an advance senior

command team to Hazelwood to help set up

an incident management team. The incident

was changed from a non-structure ﬁre to a

hazmat incident. Over the next six weeks MFB

had up to 100 people per day working at the

incident in various roles and contributed many

appliances to ﬁght the ﬁre.

MFB hazmat and scientiﬁc ofﬁcers worked

closely with the Department of Health and

EPA to establish carbon monoxide monitoring

protocols, ﬁreﬁghter health checks and work

instructions. This included regular health

monitoring of personnel working at and

visiting the mine and strict protocols.

The Hazelwood ﬁre was the longest

deployment in MFB’s history and the largest

joint activity it had participated in.

A CHALLENGING

FIRE SEASON continued

18 MFB Annual Report 2013–14

MORE THAN 385

FIRE AGENCY

PERSONNEL

WERE INVOLVED

IN THIS INCIDENT,

ON A DAY WHEN

351 CALLS WERE

RESPONDED TO

ACROSS VARIOUS

INCIDENTS.

MFB crews worked 24 hours

a day for six weeks with other

state emergency services to

contain the Hazelwood mine

ﬁre in Morwell. Photo courtesy

Keith Pakenham.

MFB continues to deliver programs and

partner with stakeholders to build the

community’s capacity to respond to and

recover from emergency incidents. This

includes engagement with groups who

are particularly vulnerable using innovative

approaches to ﬁre prevention and an

increasing focus on research.

VICTORIAN BUILT ENVIRONMENT

RISK ASSESSMENT PROCESS

(VBERAP) GUIDELINE

MFB has led the development of the

VBERAP Guideline on behalf of the State

Fire Management Planning Committee. This

project draws knowledge and experience

from stakeholders across the emergency

management sector. It ensures a consistent

and structured approach to emergency risk

assessment in the built environment.

As a result communities will be better informed

about their risk proﬁle and areas in most need

will be targeted for treatments. The guideline

was endorsed by the committee in June 2014.

In the coming year it will deliver comprehensive

support technology and a sustainable delivery

model at state, regional and municipal levels

throughout Victoria.

EDUCATION CAMPAIGNS

MFB continued to deliver education programs

targeting primary school children, teenagers,

the elderly and non-English speakers.

The Seniors Fire Safety program targets active

older people. Nearly 4,000 people attended

presentations through organisations such as

Lions, Rotary, Probus and ethnic and faith

based groups. The program won the Aged

and Disability category of the Victorian Fire

Awareness Awards in December 2013.

More than 2,000 copies of the Home Fire

Safety Booklet and Aged and Disability Insert

have been supplied to providers of community

aged care for their clients. This included copies

of both documents in more than a dozen

languages. The audio CD version is being

distributed for free at Vision Australia shops.

In collaboration with the Transport Accident

Commission, VicRoads, the Department of

Education and Early Childhood Development,

RACV, Victoria Police and CFA, MFB

continued the Fit2Drive road safety program

in secondary schools.

Based on recommendations from a coronial

hearing, the program has been incorporated

into the Victorian Government Action Plan

2013–2016. This will more than double the

program’s reach to about 500 schools and

60,000 students.

The Flames program delivers home ﬁre safety

information to newly arrived secondary school

students via English language schools and

centres. It continues to grow with specially

trained operational ﬁreﬁghters delivering

presentations at 23 learning centres reaching

1,200 students. The program provides

students with important home ﬁre safety

information they can share with their families.

SMOKE ALARMS

MFB formed a statewide Smoke Alarm Buyers

Group to support community aged and

disability care providers help their clients install

smoke alarms. This initiative fulﬁls a coronial

recommendation. A new stand-alone smoke

alarm with a built-in 10-year lithium battery

was identiﬁed as the most appropriate smoke

alarm to install. In two phases 98 agencies

purchased more than 10,000 smoke alarms.

The program more than halved the unit price of

$38 per unit, saving over $200,000.

To increase awareness about smoke alarms

an information session was developed and

delivered to 19 local government aged and

disability departments. This activity targeted

team leaders, case managers, assessors and

home maintenance workers.

HOARDING

The Hoarding Notiﬁcation System has

received an increasing number of referrals

from agencies supporting people affected

by hoarding. The system enables a discreet

electronic alert to be placed on an address,

which activates via the Station Turnout System.

This increases ﬁreﬁghter preparedness and

safety in the event of a ﬁre or other emergency

at the address. The system was a joint winner

of the Industry Category in the Victorian Fire

Awareness Awards in 2013.

A study into hoarding and squalor related

incidents, and the organisational response

to this growing issue, was conducted by

Worcester Polytechnic Institute. It conﬁrmed

that hoarding and squalor incidents occur

in nearly every local government area in the

metropolitan district. Over the past nine

months the incident rate has been one

incident every four days.

MFB IN THE

COMMUNITY

MFB Annual Report 2013–14 19

IN TWO PHASES

98 AGENCIES

PURCHASED MORE

THAN 10,000 SMOKE

ALARMS. THE

PROGRAM MORE

THAN HALVED THE

UNIT PRICE OF $38

PER UNIT, SAVING

OVER $200,000.

PUBLIC INFORMATION

CAMPAIGNS

MFB continued to deliver public information

campaigns with the CFA. The Duracell Change

Your Clock – Change Your Smoke Alarm

Battery campaign ran for the fourteenth year.

It reminds the community about the need to

ensure there is at least one working smoke

alarm on every level of every home. As well as

extensive traditional media, social media was

used to promote the campaign.

Over winter MFB and the CFA delivered the

Home Fire Safety campaign. It focused on

general ﬁre safety in the home and high-risk

activities. Research to review the past ﬁve

years of this campaign was conducted by

Worcester Polytechnic Institute. The study also

reviewed incidents in terms of rate, room of

origin and severity. It included analysis of broad

engagement and current public campaigns

by other organisations aimed at behaviour

change. The research will be used to develop

new activities to increase the program’s

effectiveness.

JUVENILE FIRE AWARENESS

The Juvenile Fire Awareness and Intervention

Program is undertaking research with Victoria

University to better understand the factors

that may predict if a child or adolescent will

continue to set ﬁres. The research is also

investigating the role of counselling and mental

health services. The research will be used to

establish a ﬁreﬁghter screening tool to measure

the risk of ﬁre setting in young people, develop

referral pathways, identify gaps in knowledge

and competencies, and establish best practice

models to deal with ﬁre risk behaviour.

COMPLIANCE AND ADVICE

SERVICES

MFB provides many ﬁre safety services

to industry through its Building Code of

Australia and audits, Building Inspection

and Compliance, Alarm Assessment, Fire

Investigation and Analysis, Dangerous Goods,

and Community Safety technical departments.

The Alarm Assessment team attended

9,481 false alarms, 452 hazmat alarms and

conducted salvage at 86 incidents in the

last ﬁnancial year. The team has recovered

about $9.6 million in fees associated with

false alarms and salvage work with damaged

sprinkler systems. This year there were 1.44

false alarms for each piece of alarm signalling

equipment (ASE). This is a slight reduction

from last year’s ﬁgure of 1.48/ASE. There are

around 6,500 ASEs in Melbourne.

MFB worked to resolve design issues on

the boundary of a residential development

in Windsor. The ﬁre safety design solution

of the multi-storey building did not have an

appropriate level of ﬁre protection. An appeal

was submitted by MFB to the Building Appeals

Board (BAB) also noting other ﬁre safety

deﬁciencies in the building. The BAB ordered

the owners to install automatic ﬁre protection

measures throughout.

MFB IN THE

COMMUNITY continued

20 MFB Annual Report 2013–14

THE DURACELL

CHANGE YOUR

CLOCK – CHANGE

YOUR SMOKE ALARM

BATTERY CAMPAIGN

RAN FOR THE

FOURTEENTH YEAR.

MFB, Police, Ambulance and

SES participate in an emergency

services demonstration at the

opening of VEMTC.

MFB IN THE

COMMUNITY continued

MFB Annual Report 2013–14 21

Table 3: Compliance and

advice services

Department Service 2013–14

Dangerous goods Written advice 208

BCA and audits Modiﬁcations 35

Letters of advice 842

309 Applications 570

1003 Variations 411

Fire safety assessment 25

Community

Safety Technical

Department

Fire engineering briefs 403

Letters of advice 49

Fire engineering reports 291

FIA Accidental ﬁres attended 5

Suspicious ﬁres attended 28

Electrical ﬁres attended 59

Undetermined ﬁres attended 5

Fatal (non-preventable) 3

Fatal (preventable) 5

Actual loss $25,113,100

Potential loss $185,651,000

Building inspections

and compliance

Class 1B – A single dwelling being a detached house or

one or more attached dwellings

Class 2 – A building containing two or more sole

occupancy units each being a separate dwelling

Class 3 – A residential building, other than a class 1 or

2, which is common place of long-term or transient living

for a number of unrelated persons

Class 5 – An ofﬁce building used for professional or

commercial purposes, excluding buildings of Class 6, 7,

8 or 9

Class 6 – A shop or other building for the sale of goods

by retail or the supply of services direct to the public

Class 7 – A building which is a carpark or is for storage

or display of goods or produce for sale by wholesale

Class 8 – A laboratory, or a building in which a handicraft

or process for the production, assembling, altering,

repairing, packing, ﬁnishing, or cleaning of goods or

produce is carried on for trade, sale, or gain.

Class 9A – A health care building 7

Class 9B – An assembly building in a primary or

secondary school, but excluding any other parts of the

building that are of another class

Class 9C – An aged care building 5

Collaboration with our partners is the

bedrock of well-coordinated, seamless

emergency management service delivery

and a truly borderless organisation. MFB’s

partnerships took many forms during the

year. Major steps were taken in terms

of interoperability with other emergency

service agencies.

A BORDERLESS ORGANISATION

The emergency management sector is

continuing to work closer together. This year

the role of the Fire Services Commissioner

was recast as the Emergency Management

Commissioner (which came into affect 1

July 2014). The Commissioner’s rolling

three-year Fire Services Reform Action Plan

is in its second year. The plan incorporates

a Leadership Integration Accountability

Framework. In addition, there are 19 projects

to be delivered by May 2016, aligned with the

following six strategic themes:

• information and operational interoperability

• state capability and capacity

• common risk management and planning

• community behaviour change

• organisational improvement

• governance and legislation.

MFB has made considerable progress

integrating these themes, concepts and

projects into the fabric of its service delivery.

Emergency Management Victoria has set clear

goals. While MFB is delivering excellent service

levels, these need to be translated into the

service delivery standards expected by the

Victorian community. This will be a challenge

for MFB and our partners. Effectively, MFB

will have to continue to deliver current service

levels while ﬁnding ways to further enhance

emergency management.

WORKING WITH PEAK BODIES

Extensive work was done through the

Australasian Fire and Emergency Services

Authorities Council (AFAC), the ﬁre services

peak body, on Australian Standard 2419.

This is the standard for the installation of ﬁre

hydrants. Work also occurred with AFAC on

a series of seminars on the use of lifts for

evacuation. Victoria has many multi-storey

buildings where lifts are used for evacuation,

in most cases because they only have one

stairway.

VICTORIAN EMERGENCY

MANAGEMENT TRAINING

CENTRE (VEMTC)

Construction of MFB’s world class training

facility at Craigieburn was completed in April

2014 as scheduled and within the $109 million

budget. The VEMTC will be proudly operated

by MFB on behalf of the State. The Operational

Training Department transitioned to the facility

in May 2014. Trainers have been educated so

they can safely operate the realistic live training

ﬁre simulators which will be used to provide hot

ﬁre training to emergency service personnel.

The facility will also provide training in specialist

technical rescue skills in line with Victoria’s all

hazards all agencies strategy. Training started in

July 2014 with selected courses to ensure that

the facility is ﬁt for purpose.

MARINE DEVELOPMENTS

MFB’s marine response capability continued

to increase with ship-to-ship transfer training

courses in 2014. The courses train marine

ﬁreﬁghters in boarding ships both at anchor

and underway. The skills learned in these

courses are vital for marine assessment and

response activities, which form an integral part

of the Marine Concept of Operations. Fireboat

1 is MFB’s primary marine response vessel. Its

second vessel, a 12-metre rapid response ﬁre

boat, is under construction in Canada and is

due for delivery to Melbourne in 2015.

JOINT AGENCY EXERCISES

MFB continues to plan and participate

in exercises to prepare for potential

emergency incidents.

MFB participated in a multi-agency incident

control centre exercise at Kangaroo Ground

in November 2013. During the exercise, the

incident management team responded to a

hypothetical bushﬁre in the Warrandyte area,

which proved useful when a bushﬁre broke out

in Warrandyte in February 2014.

In May 2014 MFB partnered with Victoria

Police, Ambulance Victoria, the SES,

Departments of Health and Human Services,

and City of Melbourne to run a marine

response exercise in Victoria Harbour.

MFB also participated in Exercise Smoke

House, a forum held at Melbourne Assessment

Prison (MAP). Located in West Melbourne

MAP is the only high-rise prison in Victoria and

has speciﬁc emergency management issues.

MFB also partnered with Metro trains,

Ambulance Victoria and Victoria Police to

practice incident scenarios in Melbourne’s

train tunnels. In addition, we partnered with

CityLink and VicRoads to run Burnley tunnel

incident scenarios.

MFB

PARTNERS

22 MFB Annual Report 2013–14

WHILE MFB IS

DELIVERING

EXCELLENT

SERVICE LEVELS,

THESE NEED TO

BE TRANSLATED

INTO THE SERVICE

DELIVERY

STANDARDS

EXPECTED BY

THE VICTORIAN

COMMUNITY.

EMERGENCY MANAGEMENT

JOINT PUBLIC INFORMATION

COMMITTEE (EMJPIC)

MFB has been working with the EMJPIC

on whole-of-government public information

and messaging. Substantial work was

done regarding the Hazelwood mine ﬁre to

coordinate ﬁre, health, environmental and

support service information for the Morwell

community and the State.

MFB also worked with the EMJPIC

and industry in the western suburbs on

consequence planning for an old tip site with

underground hotspot activity. This included

working with the site owner on monitoring and

mitigation strategies.

MFB PARTNERS continued

MFB Annual Report 2013–14 23

Honours and awards

• Commander Andrew O’Connell – Australian Fire Service Medal, Australia Day Honours

• Leading Fireﬁghter Michael Whitty – Australian Fire Service Medal, Australia Day Honours

• Retired Fireﬁghter Alan Eley – Order of Australia Medal, Australia Day Honours

• Retired Fireﬁghter Ronald Barker – Order of Australia Medal, Australia Day Honours

• Commander Colin Matheson – Emergency Services Medal, Queen’s Birthday Honours

• Senior Station Ofﬁcer Bryan Currie – CEO’s Safety Award 2013: for his leadership of the Fire Ground

Accountability System (FAST-card)

• Station Ofﬁcer Wayne George – CEO’s Special Recognition Award 2013: for outstanding achievement in

leadership and community service

• Jan Smith – CEO’s Special Recognition Award 2013: for outstanding achievement in personal leadership

and continuous business improvement

• Station Ofﬁcer Louise Cannon – Chief Ofﬁcer’s Scholarship 2013: for pioneering research and leadership

in breathing apparatus telemetry and associated technologies

• LFF David Rylance – Surf Life Saving Australia’s Trainer of the Year, 2013 Awards of Excellence

• eMap (DEPI, CFA, MFB and SES) – 2013 Victorian Spatial Excellence Awards People and

Community Award winner and 2013 Fire Awareness Awards New and Emerging Information

Technologies Award winner.

• MFB Seniors Fire Safety Program – 2013 Fire Awareness Awards Aged and Disability Award winner

• The Hoarding Notiﬁcation System – 2013 Fire Awareness Awards Industry/Service Award winner

Promotions Long Service Awards

Chief Ofﬁcer 145 years 2

Commander 20 40 years 10

Senior Station Ofﬁcer 16 35 years 40

Leading Fireﬁghter 80 30 years 6

Appointments 25 years 149

Executive Directors 215 years 3

Directors 210 years 188

Corporate (admin, technical, clerical) 14

Recruit Fireﬁghters 48

Our people are passionate about what

they do. MFB has a strong organisational

culture and we strive to support our

people to achieve their own and the

organisation’s goals.

TRAINING

The new joint MFB and CFA recruit courses

at VEMTC Craigieburn symbolise the start

of an exciting new chapter in collaborative

emergency sector training. The course, which

was developed in the last ﬁnancial year and

will be delivered in August 2014, comprises 12

MFB and 12 CFA participants, and aligns with

the State Fire and Emergency Services Training

Framework. The framework aims to lay the

foundation for a uniﬁed approach to training

across Victoria’s ﬁre and emergency services.

It has three objectives:

• maximised interoperability, capacity,

capability, resilience and sustainability

through training that harnesses synergies

and improves consistency of practice

• a hazards-speciﬁc approach to training that

capitalises on the knowledge and expertise

of the collective, reduces duplication of

effort and keeps our personnel safe

• an innovative and ﬂexible training model

for the collective that meets evolving

community needs and expectations,

and examines the most effective way

for ﬁre and emergency services to train,

maintain skills and undertake professional

development.

MFB

PEOPLE

24 MFB Annual Report 2013–14

THE NEW JOINT

MFB AND CFA

RECRUIT COURSES

AT VEMTC

CRAIGIEBURN

SYMBOLISE THE

START OF AN

EXCITING NEW

CHAPTER IN

COLLABORATIVE

EMERGENCY

SECTOR TRAINING.

Table 4: Training programs

2013–14

Course Courses

delivered

Total

participants

Total

training days

Organisational

Recruit 248 170

Continuation/retention 496 32

Leading ﬁreﬁghter 20 80 80

Senior station ofﬁcer 116 65

Commander 220 110

Operational

Water tanker 10 40 10

Ultra large pumper 1 4 4

Teleboom 416 16

Ladder platform 312 30

Heavy rescue 648 72

Hazmat technician 112 10

Control unit 2 4 14

Waterway emergency response 116 30

Swift water rescue 448 8

Driver training 848 64

Forklift 416 32

Total 73 524 747

REGISTERED TRAINING

ORGANISATION

MFB is a registered training organisation

(RTO) and is committed to meeting the

requirements of the Australian Quality Training

Framework (AQTF) standards for RTOs. The

AQTF provides the national framework that

registers and regulates organisations. This

ensures that the training MFB provides and the

qualiﬁcations issued by MFB are recognised

throughout Australia. MFB was audited during

the year and our registration as a RTO was

extended for ﬁve years – the maximum

period allowed.

EMERGENCY MEDICAL

RESPONSE TRAINING

The EMR program continued to build its

capacity during the year. Two recruit courses

(48 recruits) trained in EMR, 96 ﬁreﬁghters

completed retention training, and 395

ﬁreﬁghters undertook re-certiﬁcation. MFB has

extended these sessions to Victoria Water

Police who have been attending with marine

response crews.

ORGANISATIONAL

DEVELOPMENT

A number of strategies are being implemented

that are designed to build a highly skilled,

involved and adaptable workforce, and

an organisational culture that encourages

collaboration, trust and innovation.

Performance and career development:

Paypoint Progression Assessment is

designed to clarify position objectives and

accountabilities, promote career development

and job satisfaction, and ultimately improve

organisational performance. It is a major

innovation arising from the new Corporate

and Technical Employees Agreement 2013

and implements a comprehensive suite

of administrative tools, capability-building

resources, and targeted communications.

These aim to ensure that our people are well

supported in working towards MFB’s goals.

Leadership development: Phase one of the

MFB Senior Leadership Program has resulted

in a positive shift in leadership styles and

capabilities, group cohesion, and engagement

of our senior leaders. These outcomes directly

support MFB’s goal to create a workplace

culture that promotes constructive behaviours

and accountability.

Learning and development: MFB

this year offered ﬁve new learning and

development courses. The courses are:

Personal Effectiveness, Resilience in Change,

Valuing Difference and Human Rights, Giving

and Receiving Feedback, and Managing

Challenging Conversations.

HR SYSTEMS

MFB continues to invest in HR systems

that assist our people to be effective in their

roles. Key activities included: the upgrade

of the web-based executive performance

management system and development of an

online human rights and workplace respect

training module.

DIVERSITY AND INCLUSION

MFB has developed a Diversity and Inclusion

Action Plan to maintain a fair and inclusive

workplace culture. Actions include engaging

with communities to improve MFB’s service

delivery to diverse and vulnerable groups.

The plan will also help MFB: recruit and

retain quality staff from under-represented

groups; build organisation-wide leadership,

commitment and accountability; and meet

legislative obligations.

Initiatives this year included: diversity and

inclusion awareness training; participation

on the Department of Justice Koori Inclusion

Action Plan Project Board; recruitment

strategies; and appointment of additional

equal employment contact ofﬁcers. MFB also

improved the way it captures Aboriginal and

Torres Strait Islander employment data.

WORKPLACE BARGAINING

During the year both the Corporate and

Technical employees and the Mechanical

Workshops enterprise agreements were

ﬁnalised. MFB continues bargaining with the

United Fireﬁghters Union and independent

bargaining representatives on new Senior

Operational Leadership and Operational

Employees agreements.

MFB PEOPLE continued

MFB Annual Report 2013–14 25

PHASE ONE OF

THE MFB SENIOR

LEADERSHIP

PROGRAM HAS

RESULTED IN A

POSITIVE SHIFT

IN LEADERSHIP

STYLES AND

CAPABILITIES,

GROUP COHESION,

AND ENGAGEMENT

OF OUR SENIOR

LEADERS.

AUDIT OF UNPLANNED LEAVE

On 6 March 2013 the Auditor-General released

a report on unplanned leave in three of

Victoria’s emergency service organisations.

Unplanned leave at MFB is signiﬁcantly higher

on weekends than weekdays leading to

increased overtime costs. Table 6 provides a

breakdown of leave by type. Table 7 provides a

breakdown of overtime costs by type.

MFB’s enterprise agreement limits

management approaches to this issue and

our systems and processes also contribute

to the costs of unplanned leave. MFB

is actively implementing all the audit

recommendations and the Strategy Planning

and Resources Committee of the Board is

monitoring this process.

WORK HEALTH AND SAFETY

MFB works to reduce the number and severity

of incidents, and uses systems and programs

to achieve better health and safety outcomes.

This year we implemented the Working Safely

Framework which sets the strategy for the

next three years. The framework will enhance

our safety systems and culture. Additional

performance measures have been developed

to improve monitoring of safety performance

with an increased focus on lead indicators.

MFB introduced new incident reporting

software, MFBSafe. It is a total work ﬂow tool

to record hazards, near misses, incidents

and injuries. MFBSafe allows for active

reporting, tracking of risk controls and trend

analysis. It aligns MFB with other emergency

service organisations and contributes to

interoperability.

MFB PEOPLE continued

26 MFB Annual Report 2013–14

MFBSAFE ALLOWS

FOR ACTIVE

REPORTING,

TRACKING OF RISK

CONTROLS AND

TREND ANALYSIS.

IT ALIGNS MFB

WITH OTHER

EMERGENCY

SERVICE

ORGANISATIONS AND

CONTRIBUTES TO

INTEROPERABILITY.

Table 5: Unplanned absences

Table 6: Dollar cost of overtime

Overtime types are prescribed by the

enterprise agreement for circumstances

where employees are redeployed to

other ﬁre stations or retained on duty

to maintain crewing strength.

Table 7: WorkCover data

Year Sick

leave

Family

leave

Sick and

family

leave

Hours

per

FTE

Target

hours

per

FTE

Work

Cover

Total

unplanned

absences

2013–14 4.2 2.1 6.3 138 <120 2.16 8.5

2012–13 4.0 2.1 6.0 128 <120 2.08 8.1

2011–12 4.5 2.0 6.5 133 n/a 2.10 8.6

Year Claims Days lost Number of lost time injuries Severity rate

2013–14 373 5379 216 24.9

2012–13 353 5416 202 26.8

2011–12 310 4190 187 22.4

2010–11 298 4768 204 23.4

Actual

($)

Total

overtime

Recall

overtime

Maintain

strength

overtime

Fire

call

Muster

and

dismissed

Standby

and

dismissed

Excess

travel

Other

2013–14

17,702,866 7,226,000 4,549,506 988,553 604,382 432,066 1,050,456 2,851,903

2012–13

13,115,000 5,343,000 3,878,000 770,000 661,000 356,000 1,148,000 959,000

2011–12

17,661,000 8,887,000 4,651,000 728,000 648,000 307,000 1,189,000 1,251,000

MFB is committed to having a ﬁt and healthy

workforce to meet operational requirements.

We have implemented the Active for Life

program. This has been designed to promote

self-awareness and to highlight the risks of

ageing and inactivity.

This year there has been greater focus on

awareness training about the signs and

symptoms of various mental health problems.

Guidance material and other resources on the

different assistance that is available to staff

has been promoted and distributed. The Peer

Support program was also renewed to provide

access to support for our employees.

There was a 5.66 per cent increase in the

number of WorkCover claims compared

to the previous year. However, the number

that became standard claims has reduced.

There was a seven per cent increase in the

number of lost time injuries (one day or more

lost time), though the total number of days

lost decreased slightly. The severity rate has

decreased by 1.9 days (7.08 per cent) when

compared with 2012–13.

Knee, lower back and shoulder injuries remain

the most common. However, injuries resulting

in the highest average number of lost time

days were hip and psychological injuries.

Musculoskeletal injuries accounted for 69 per

cent of all lost time.

The return to work program has seen

improved results over the last year, with

employees returning to work in some capacity

more quickly following injury or illness. MFB

continued to use the Keiser and Strive

functional rehabilitation programs to assist

employees to return to or remain at work.

Regular case conferencing between medical

providers, return to work coordinators, claims

ofﬁcers and claims agent representatives has

also led to positive results.

STAFF NUMBERS

In the last ﬁnancial year MFB has recruited

an additional 46 ﬁreﬁghters. Overall ﬁreﬁghter

numbers decreased by seven this year due to

retirements. We also employed 14 additional

corporate personnel as a result of reduced

use of agency staff and recruiting targeted

skill sets into permanent roles to build MFB’s

internal capacity.

MFB has 1,988 male and 209 female

employees of which 26 hold senior positions

within the organisation.

MFB PEOPLE continued

MFB Annual Report 2013–14 27

Table 8: Work force data

Total Total

permanent

Perm

full-time

Perm

part-time

Total

temporary

Temp

full-time

Temp

part-time

2014

Total

Employees 2,197 2,189 2,164 25 8 7 1

FTE 2,182.27 2,174.67 2,161.00 13.67 7.60 7.00 0.60

Corporate

staff

Employees 338 330.00 306 24 8.00 7 1

FTE 323.74 316.14 303.00 13.14 7.60 7.00 0.60

Operations

staff

Employees 1,859 1,859 1,858 1 0 0 0

FTE 1,858.53 1,858.53 1,858.00 0.53 0.00 0.00 0.00

2013

Total

Employees 2,190 2,181 2,155 26 9 9 0

FTE 2,178.20 2,169.20 2,154.53 14.67 9.00 9.00 0.00

Corporate

staff

Employees 324 315 290 25 9 9 0

FTE 313.14 304.14 290.00 14.14 9.00 9.00 0.00

Operations

staff

Employees 1,866 1,866 1,865 1 0 0 0

FTE 1,865.06 1,865.06 1,864.53 0.53 0.00 0.00 0.00

MFB PEOPLE continued

28 MFB Annual Report 2013–14

Figure 8: MFB employee

gender

Ongoing

Temporary

Figure 10: Corporate versus

operational staff numbers

Operations

Corporate

Figure 9: MFB staff age

distribution (2014 and 2013)

Under 25

25–34

35–44

45–54

55–64

Over 64

2500

2000

1500

1000

500

2014

HEADCOUNT FTE

2013 2014 2013

1859

1866

1859

1865

338

324

313

38.7%

21.8%

21.0%

0.9%

20132014

15.8%

21.2%

0.5%

16.2%

41.7%

19.5%

1.1%

1.6%

2500

2000

1500

1000

500

Females

2013

Males Females Males

205

1984

199

2014

1982

MFB strives to provide world class

emergency management services in the

most efﬁcient and effective way possible.

This means MFB constantly looks at ways

to improve how we work. During the year,

MFB maintained its focus on innovation

and improved internal processes to ensure

the best outcomes for the community.

FIRECOM REPLACEMENT

The ICT strategy identiﬁed the need to replace

the legacy Firecom dispatch system, which

processes information, such as the station

turnout of appliances to incidents based on

information received from ESTA (000). The

project to replace this system started during

the year, including consultation with various

stakeholders to obtain input into design

and development.

FAST-CARD

The Fireground Accountability System

T-card (FAST-card) began trials in September

2013. FAST-card was developed to improve

ﬁreground accountability. It creates an

electronic log of appliances and their crews,

and the information is available to all other

MFB personnel. The system is installed

on station-based computers and mobile

telephones that are provided on appliances.

In April 2014 the trial of FAST-card was

expanded to include GPS tracking of

appliances to provide more accuracy about

the location of the appliance and incident.

TENDERLINK

All tenders are now processed using

TenderLink, an online tender management tool

owned by Fairfax Digital. The system has more

than 250,000 suppliers registered in Australia,

enabling MFB to identify new suppliers. MFB

can receive up to 30 applications for some

tenders. TenderLink eliminates double handling

and ensures all deadlines are adhered to. It

also means it is now possible to advertise,

issue, manage and monitor all tenders online.

SECURE PRINTING

MFB successfully completed a pilot on secure

printing at the Burnley Complex. Secure

printing has since been enabled on most multi-

function devices at Burnley and at VEMTC

in Craigieburn. Secure printing reduces the

need for dedicated printers for conﬁdential

documents and eliminates the possibility of

documents being left uncollected at printers.

This also allows MFB to consolidate printer

hardware, reduce power consumption,

maintenance and costs.

DATA CENTRE UPGRADES

A program of works to improve the resilience

of the Eastern Hill and Baker Street data

centres was completed during the year. It

included the installation of an uninterruptible

power supply and computer room air

conditioning. This enables MFB to improve

interoperability by hosting equipment for other

agencies, such as Ambulance Victoria and

CFA. The improved systems also allow quicker

recovery after unplanned outages, and reduce

data loss and re-work.

SAP UPGRADE

MFB is upgrading SAP for MFB, SES and CFA.

The upgrade will deliver a contemporary SAP

system for all three agencies. It will improve

availability and reliability, and help MFB achieve

its objectives and obligations to stakeholders

and the community. This is one of a number of

MFB projects that will improve interoperability

in Victoria’s emergency service agencies.

PROPERTY AND ASSETS

In 2013–14 construction commenced on

two new ﬁre stations in Glen Iris and Altona,

and Sunshine Fire Station was refurbished.

Commander accommodation at the Ormond

Fire Station was also completed. The

refurbishment of Greensborough Fire

Station commenced.

INNOVATION AND

EFFICIENCY

MFB Annual Report 2013–14 29

IN APRIL 2014 THE

TRIAL OF FAST-CARD

WAS EXPANDED

TO INCLUDE GPS

TRACKING OF

APPLIANCES TO

PROVIDE MORE

ACCURACY ABOUT

THE LOCATION OF

THE APPLIANCE

AND INCIDENT.

ENVIRONMENT

MFB has a social and environmental

responsibility to reduce the impact of its

operations on the environment. This public

commitment is formalised within MFB’s

Environment Policy, and implemented through

its environment strategy and risk-based

Environmental Management System (EMS).

Since 2005–06 MFB has reported on

its environmental performance and the

implementation of its EMS based on

international standard AS/NZS ISO14001,

Environmental Management Systems.

The strategy reﬂects organisational goals

and ensures compliance with government

policies and statutory requirements.

Highlights of MFB’s environmental program

during 2013–14 are as follows.

• An Environment Committee was

established that reports quarterly to MFB’s

executive leadership team (ELT). The

committee comprises representatives from

across MFB. It implements the strategy

and examines policy and operational

issues, monitors MFB’s compliance with

government objectives and progress

against targets.

• MFB is undertaking an energy and water

efﬁciency program across 27 ﬁre stations,

corporate ofﬁces, and training and

maintenance facilities. This is part of the

Victorian Efﬁcient Government Buildings

program. It will achieve greenhouse gas

reductions of about 13 per cent by 2022.

This program will help MFB reduce water

and energy use, creating long-term utility

cost savings.

• MFB has successfully transitioned to the

Victorian Government’s environmental

data management system, Eden Suite.

This web-based service collects whole-

of-government utility data direct from

suppliers. It allows MFB staff to access

real-time data on energy and water use.

• MFB has ﬁnalised the phase out of Tridol

and 3M ATC foams on all appliances,

replacing them with Solberg foam for

environmental, operational and OHS

reasons. This will have major environmental

beneﬁts over time.

• MFB has continued to use our extensive

building sub-metering system. This system

has enabled us to identify problems such

as water leaks and allowed us to take

quick action to rectify issues.

• The waste recycling rate has improved

over the year with the help of a new

waste contract.

• Key staff were trained in the Global

Reporting Initiative sustainability reporting

framework as part of a corporate social

responsibility (CSR) initiative. Further work

planned includes research into the potential

application of an MFB CSR framework.

INNOVATION

AND

EFFICIENCY continued

30 MFB Annual Report 2013–14

MFB IS UNDERTAKING

AN ENERGY AND

WATER EFFICIENCY

PROGRAM ACROSS

27 FIRE STATIONS,

CORPORATE OFFICES,

AND TRAINING AND

MAINTENANCE

FACILITIES.

Figure 11: Greenhouse gas

emissions (tCO2-e) 2013–14

Electricity

Waste disposal

Natural gas

Operational ﬂeet

Light ﬂeet

Air travel

61%

12%

13%

INNOVATION

AND

EFFICIENCY continued

MFB Annual Report 2013–14 31

Table 9: Environmental indicator

report (FRD24c)1

Reporting period April 2013 to

March 2014

1 MFB facilities do not undertake

ofﬁce-based activities in isolation

of operational activities. (Vehicle

maintenance, ﬁreﬁghting and skills

maintenance occur at sites undertaking

administration and ofﬁce-based

activities.) Paper, waste, water and

energy data is reported for all MFB

facilities (ﬁre stations, ofﬁces and

training facilities) for the period of

April 2013 to March 2014. Delayed

quarterly utility invoice periods prevent

30 June data from being available

until September 2014. Reported

data excludes all usage and waste

associated with direct ﬁre ﬁghting

activities.

2 Water use data is metered potable

water for all MFB sites. Usage does

not include water used in operations

or training.

3 FTE – full-time equivalent staff for

the period (April 2013 to March 2014)

of 2,232.

4 Energy use includes electricity and

natural gas consumed at MFB ofﬁces,

training centres and ﬁre stations.

5 MFB stopped purchasing GreenPower

on 31 July 2013.

6 Greenhouse gas emissions are

reported using scope 1, 2 and 3

emission factor calculations from the

Australian Government Department

of Climate Change and Energy

Efﬁciency’s National Greenhouse

Accounts Factors 2013. Greenhouse

emissions from operational ﬂeet include

emissions from use of ﬁre trucks and

appliances.

7 Waste greenhouse gas emissions

have been calculated using collected

bin volumes and assuming the landﬁll

waste composition of 40 per cent food:

40 per cent paper: 20 per cent textiles.

8 Flight greenhouse gas emissions have

been calculated in accordance with the

Greenhouse Gas Protocol 2006.

9 One ream is 500 sheets of A4 paper.

Recycled content is calculated as

the average percentage of recycled

content of paper purchased.

10 Waste and recycling measurements are

based on total volume of bins collected

from MFB sites (m3).

11 Transportation light ﬂeet includes all

corporate administration vehicles

(hybrids, LPG and unleaded petrol

cars). It excludes all operational

vehicles.

Environmental

indicator

Unit of

measure

2005–06

baseline

2008–09 2009–10 2010–11 2011–12 2012–13 2013–14

Water2

Consumption

per FTE3

kL per

FTE

15.7 14.1 11.9 11 11.5 14.6 13.5

Total consumption kL 29,171 28,047 24,620 22,504 24,323 32,284 30,031

Energy (electricity and gas)4

Green Power

purchased5

per cent 15 15 15 15 25 25 8

Energy consumption

per FTE

GJ per

FTE

24.1 25.7 24.0 25 24.9 24.2 21.8

Energy consumption GJ 44,788 51,330 49,892 50,440 52,487 51,634 48,555

Greenhouse emissions6 (tCO2-e)

Waste disposal72,407 2,375 2,198 2,575 2,582 2,365 2,096

Electricity and

gas use

9,397 10,596 10,604 10,662 9,782 9,844 11,168

Light ﬂeet 1,140 1,271 1,233 1,187 1,417 1,304 1,146

Operational ﬂeet 1,838 1,950 1,952 1,980 1,810 1,888 1,977

Air travel (ﬂights)8n/a 68 140 197 145 166 156

Total MFB greenhouse

emissions

14,782 16,260 16,127 16,601 15,736 15,566 16,544

Paper9

Use per FTE reams

per FTE

4.9 4.6 4.1 3.8 3.7 3.6 3.5

Total use reams 9,028 9,024 8,543 7,813 7,721 7,647 7,718

Average recycled

content

per cent n/a 49 49 49 95 93 97

Waste and recycling10

Waste generated

per FTE

m3 per

FTE

3.8 3.4 3.3 3.5 2.7 3.7 3.2

Total waste m37,060 6,643 6,792 7,198 5,712 7,902 7,109

Total recycled per cent 25 21 21 21 24 34 35

Transportation (light ﬂeet)11

Fuel consumption

per FTE

GJ per

FTE

9.2 8.9 8.3 8 9 8.2 6.9

Total fuel

consumption

GJ 17,079 17,742 17,123 16,545 19,097 17,525 15,387

Travel (light ﬂeet)

per FTE

kilometres

per FTE

2,186 2,126 2,035 2,163 2,278 2,260 1,801

Total travel

(light ﬂeet)

kilometres 4,059,721 4,239,766 4,221,467 4,445,069 4,808,055 4,821,575 4,018,711

This statement outlines MFB’s corporate

governance practices.

RESPONSIBLE MINISTER

The responsible minister is the Minister for

Police and Emergency Services.

FUNCTIONS AND POWERS

MFB is a statutory body established in Victoria

pursuant to the Metropolitan Fire Brigades Act

1958 (MFB Act). MFB derives its operational

powers from the MFB Act, the Metropolitan

Fire Brigades (General) Regulations 2005 (MFB

Regulations), the Metropolitan Fire Brigades

(Contributions) Regulations 2009, the Country

Fire Authority Act 1958, the Electricity Safety

Act 1998, the Emergency Management Act

1986, the Emergency Management Act

2013, the Gas Safety Act 1997, the Building

Act 1993, the Building Regulations 2006,

the Residential Tenancies Act 1997, the

Residential Tenancies (Caravan Parks and

Movable Dwellings Registration and Standards)

Regulations 2010 and other legislation.

MFB’s principal decision making powers

affecting members of the public are in the MFB

Act and the MFB Regulations, and should be

referred to in the ﬁrst instance.

MFB’s headquarters are located at 456

Albert Street, East Melbourne Victoria 3002,

Australia.

CHANGES TO GOVERNING

LEGISLATION

The Emergency Management Act 2013

became law on 3 December 2013 and

commenced operation on 1 July 2014.

The Act amends but does not replace the

Emergency Management Act 1986. The Act is

a further step in the reform of the emergency

services sector in Victoria following the

publication of the White Paper.

The most signiﬁcant changes introduced by

the Emergency Management Act 2013 are

the following.

• The ofﬁces of the Fire Services

Commissioner and the Emergency

Services Commissioner were abolished

and replaced by the Emergency

Management Commissioner and Inspector-

General for Emergency Management.

• Major emergencies will be categorised as

Class 1 or Class 2. A Class 1 emergency is

a major ﬁre or any other major emergency

where MFB, the CFA or the SES are the

designated control agency under the

state emergency response plan. A Class

2 emergency means a major emergency

which is not a Class 1 emergency. A Class

2 emergency and is also not a warlike act,

act of terrorism, hijack, siege or riot.

MFB CORPORATE GOVERNANCE

FRAMEWORK

MFB’s corporate governance framework

comprises documents and practices which

assist it to comply with its internal and

legislative obligations. These include:

• the Corporate Governance Charter,

which sets out the composition, roles,

and accountabilities of the Board of

Management, Board Committees, and

their members

• a policy framework and hierarchy of

documents, which provides for the

development, approval, implementation,

publication and review of organisational

policies and procedures

• individual policies addressing governance,

ﬁnancial, and strategic issues (such as risk

management, fraud control, ﬁnancial code

of practice, and health, safety and welfare)

which the Board approves periodically

• policies addressing operational matters

periodically approved by management.

The Corporate Governance Charter, policy

framework, and hierarchy of documents have

been reviewed and updated in 2013–14 to

strengthen MFB’s corporate governance

framework.

THE BOARD OF MANAGEMENT

The Board is responsible for the overall

governance of the organisation including its

strategic direction, goals for management and

monitoring the achievement of these goals.

COMPOSITION OF THE BOARD

The Act allows for up to seven Board members

to be appointed by the Governor in Council,

one of whom is to be appointed President and

another Deputy President.

CORPORATE

GOVERNANCE

STATEMENT

32 MFB Annual Report 2013–14

Board members in ofﬁce for the year were:

• Neil Comrie (President)

• Ken King (Deputy President)

• Jay Bonnington

• Alf Long

(retired 13 September 2013)

• John Lord

• David Purchase

• Therese Ryan

(commenced 20 August 2013)

• Stuart Alford

(commenced 14 September 2013)

The Board met on 10 occasions in

2013–14. Executives, operational staff and

representatives of other organisations are

invited to Board meetings when required for

discussions on relevant items.

CODE OF CONDUCT

The Board adheres to the principles contained

in the Directors’ Code of Conduct developed

by the State Services Authority (SSA).

(The Victorian Public Sector Commission

succeeded the SSA from 1 April 2014.)

The Board complies with section 21 of the

MFB Act which requires that members of the

Board do not place themselves in a position

where there is conﬂict, actual or potential,

between their private interests and the duty

owed to MFB. The Corporate Secretary

maintains a register of members’ interests.

A schedule of Board members’ interests is

provided to each Board meeting for Board

members’ information.

All Board members and staff are required

to act with integrity in the performance of

their duties. The MFB Board and Executive

Leadership Team are committed to the

promotion of the Public Sector Values and

Employment Principles in section 7 of the

Public Administration Act 2004.

BOARD PROFESSIONAL

DEVELOPMENT

All Board members have the opportunity to

visit MFB facilities and meet with management

and operational staff to enhance their

understanding of operational issues and the

business. The Board has a formal induction

program for new Board members covering the

nature of the business, ﬁnancial management,

key performance indicators, current issues,

corporate strategy and the expectations of

the Board concerning the performance of

Board members. Board members have also

attended seminars and conferences on current

operational and governance issues.

BOARD PERFORMANCE

The Board regularly conducts evaluations

of its own performance and that of its

committees. It also continues to implement the

recommendations of the externally facilitated

Board performance reviews.

BOARD COMMITTEES

The Board’s committee structure is set

out below.

Risk and Audit Committee

This committee assists the Board to fulﬁl

its corporate governance and oversight

responsibilities in relation to risk management

and internal control systems, accounting

policy and practices, internal and external

audit functions, and ﬁnancial reporting.

The Committee does not relieve any Board

member of their responsibilities for these

matters.

Membership

• Jay Bonnington (Chair)

• David Purchase

• Stuart Alford

• Neil Comrie (ex ofﬁcio)

• Alf Long (retired 13 September 2013)

Strategy, Planning and Resources

Committee

This committee assists the Board to ensure the

efﬁcient and effective allocation of resources to

implement MFB’s strategic and business plans.

Membership

• Ken King (Chair)

• Jay Bonnington

• John Lord

• Therese Ryan

• Stuart Alford

• Neil Comrie (ex ofﬁcio)

Health and Safety Committee

This committee assists the Board to fulﬁl its

responsibilities in relation to health and safety

matters arising out of the activities of MFB, as

they affect employees, contractors and the

community.

Membership

• John Lord (Chair)

• Ken King

• David Purchase

• Therese Ryan

• Neil Comrie (ex ofﬁcio)

• Alf Long (retired 13 September 2013)

• Volker Maier (independent advisor)

CORPORATE

GOVERNANCE

STATEMENT continued

MFB Annual Report 2013–14 33

Executive Remuneration Committee

The whole Board acts as the Executive

Remuneration Committee when required.

Ad hoc committees

Ad hoc committees may be formed to address

speciﬁc important issues arising from time to

time, especially those which pose a high level

of risk.

INTERNAL CONTROL

The Board acknowledges that it is responsible

for oversight of the MFB’s overall internal

control framework. To assist in discharging

this responsibility, the Board has overseen

management’s instigation of an internal control

framework that can be described as follows.

• Strategic and Business Plan – MFB’s

performance in delivering corporate

objectives is monitored by the Board

throughout the year.

• Financial reporting – there is a

comprehensive budgeting cycle with an

annual budget approved by the Board

and the Minister. Monthly actual results

are reported against budget and revised

forecasts are prepared regularly.

• Internal audit – through the Board’s Risk

and Audit Committee a comprehensive,

three-year, rolling internal audit program

is established. It includes ﬁnancial,

operational and system processes and

controls. MFB has engaged an external

service provider as its Internal Auditor.

• Investment appraisal – MFB has clearly

deﬁned guidelines for capital expenditure.

These include measurement against

corporate objectives, annual budgets,

detailed appraisal and review procedures,

and levels of delegated authority.

• Corporate policies – major new policies

and amendments to existing policies are

approved by the Board and communicated

to all employees. MFB’s policy framework

includes management policies, general

orders, and standard operating

procedures, which are approved by

management.

RISK MANAGEMENT

The MFB risk management framework

and policy were reviewed for effectiveness,

adequacy, suitability and improvement during

the year, conﬁrming MFB’s commitment to risk

management.

Processes – such as annual business and

strategic planning, the integration of risk

management, and MFB’s risk appetite – have

been enhanced to enable MFB to receive

better risk and assurance insights. Directorate

risks are recognised and articulated, enabling a

comprehensive risk proﬁle to be developed for

the coming year.

During 2013 the Victorian Managed Insurance

Authority (VMIA) completed a Risk Framework

Quality Review of MFB’s Risk Management

Framework. The review is independent and

designed to assist senior leaders to identify

their current risk maturity and opportunities

to enhance their risk management practices.

The review compared MFB’s risk management

approach with VMIA’s seven-element risk

maturity model which is based on the

Australian Standard for Risk Management AS/

NZS ISO 31000:2009. The review described

MFB’s risk maturity level as effective.

CORPORATE

GOVERNANCE

STATEMENT continued

34 MFB Annual Report 2013–14

Table 10: Attendance by

Board Members (expressed

as number of meetings

attended/meetings

eligible to attend)

Board Risk and

Audit

Committee

Strategy,

Planning and

Resources

Committee

Health and

Safety

Committee

Executive

Remuneration

Committee

Number of meetings

to 30 June 2014

10 5 3 4 2

N. Comrie 9/10 3/5 2/3 4/4 2/2

K. King 9/10 3/3 4/4 1/2

S. Alford 9/10 5/5 3/3 2/2

J. Bonnington 8/10 4/5 3/3 2/2

J. Lord 9/10 3/3 4/4 2/2

D. Purchase 9/10 5/5 4/4 2/2

T. Ryan 9/9 2/3 2/3 2/2

A. Long (retired

13 Sept 2013)

1/1 1/2

The review also highlighted some opportunities

for improvement. These include:

• developing key risk indicators to monitor

the impact on performance and the

achievement of objectives

• enhancing risk driver identiﬁcation to help

prioritise treatment plans

• developing targeted risk management

training to build capability

• documenting how inter-agency risks

are assessed and treated to support

interoperability.

COMPLIANCE WITH THE

VICTORIAN GOVERNMENT RISK

MANAGEMENT FRAMEWORK

Under the Victorian Government Risk

Management Framework all government

agencies and departments must include a

statement in their annual reports attesting

to the effectiveness of three elements of the

organisational Risk Framework.

Direction 4.5.5 Risk Management Compliance,

of the Standing Direction of the Minister for

Finance, requires a report on the application

of the Victorian Risk Management Framework

by departments and agencies deﬁned as

public bodies in section 3 of the Financial

Management Act.

The following standard Risk Attestation

Statement was presented to the Risk and

Audit Committee at its meeting on 20 May

2014. This statement is consistent with the

template in the Victorian Government Risk

Management Framework.

Attestation of Compliance with

the Victorian Government Risk

Management Framework

I, Neil Comrie, President of the Board,

certify that the Metropolitan Fire and

Emergency Services Board has risk

management processes in place

consistent with AS/NZS ISO 31000:2009

and an internal control system is in place

that enable the executive to understand,

manage and satisfactorily control risk

exposures. The Metropolitan Fire and

Emergency Services Board veriﬁes this

assurance and that the risk proﬁle of the

Metropolitan Fire and Emergency Services

Board has been critically reviewed within

the last 12 months.

INSURANCE

In accordance with legislative requirements

and the Insurance Management Policy for

General Government Sector issued by the

Victorian Government, the VMIA manages nine

insurance policies on behalf of the Board. The

policies are reviewed annually by MFB and

the VMIA for their adequacy when measured

against MFB’s service delivery activities and

residual risk proﬁle.

Although VMIA provides a claim service,

most losses and claims, in particular those

associated with motor vehicle incidents, are

handled internally, as they are usually below

policy deductibles. This arrangement is the

most efﬁcient in terms of claims management

costs.

Insurance Attestation – Full Compliance

I, James Higgins, Accountable Ofﬁcer,

certify that the Metropolitan Fire and

Emergency Services Board has complied

with Ministerial Direction 4.5.5.1 –

Insurance.

CORPORATE

GOVERNANCE

STATEMENT continued

MFB Annual Report 2013–14 35

CONSULTANCIES UNDER $10,000

There were two consultants engaged in

2013–14 where the fees for each consultant

were less than $10,000. The aggregate

amount for these two consultancies was

$11,450. These ﬁgures exclude GST.

MAJOR CONTRACT

COMPLIANCE

During 2013–14, there were no contracts with

a value greater than $10 million entered into

by MFB. Contracts with a value of $100,000

and above are placed on www.tenders.vic.gov.

au in accordance with Victorian Government

Purchasing Policy.

CORPORATE

GOVERNANCE

STATEMENT continued

36 MFB Annual Report 2013–14

Table 11: Consultancies over

$10,000

Consultant Purpose of

consultancy

Start

date

End

date

Total

approved

project fee

(excld.

GST)

Expenditure

2013–14

(excld.

GST)

Future

expenditure

(excld. GST)

Linus Information

Security

Thornbury –

Business

Continuity Plan

September

2013

February

2014

$30,854 $30,854 nil

Madison Cross Procurement

Improvement

Program

May 2013 February

2014

$39,850 $39,850 nil

Colmar Brunton Community

Resilience

Research

November

2013

February

2014

$25,461 $25,461 nil

There

Communications

strategy and

implementation

April 2014 June 2014 $30,000 $27,500 nil

Deloitte Touche

Tohmatsu

PIAWE Project April 2013 December

2013

$55,867 $55,867 nil

Deloitte Touche

Tohmatsu

Evaluation of

Strategies and

Business Ops –

2014

November

2013

March

2014

$29,370 $29,370 nil

Deloitte Touche

Tohmatsu

Strategic Review

of FES

July 2013 Closed $25,000 $24,179 nil

Deloitte Touche

Tohmatsu

MFB Review of

VEMTC pricings

January 2014 July 2014 $36,540 $36,540 nil

IKD MFB Review of

purchasing of

external legal

services

May 2013 July 2013 $22,200 $13,200 nil

IKD MFB Review

legal panel

tender

submissions

August 2013 November

2013

$17,600 $17,600 nil

Trisigma MFB Review

of Health and

Safety Dept

May 2013 December

2013

$65,922 $65,922 nil

Communications

for Health P/L

Health Assess

Standards for

Fireﬁghters

November

2013

February

2014

$21,000 $21,000 nil

Deloitte Touche

Tohmatsu

SAP/AIX Review October

2013

December

2013

$135,000 $135,000 nil

Lodestone SAP Detailed

design

March 2014 June 2014 $44,500 $44,500 nil

Fujitsu SAP Upgrade

Assessment

September

2013

December

2013

$75,000 $75,000 nil

Fujitsu SAP Upgrade

Assessment

May 2013 July 2013 $20,000 $20,000 nil

Deloitte Touche

Tohmatsu

Current State

Discovery and

Initiation

February

2014

June 2014 $301,254 $200,903 $100,351

Total $975,418 $862,746 $100,351

VICTORIAN INDUSTRY

PARTICIPATION POLICY ACT 2003

The Victorian Industry Participation Policy

(VIPP) applies when contracts greater than

$3 million in the metropolitan area are entered

into. During 2013–14, two contracts were

entered into by MFB that exceeded $3 million.

The contracts were for the construction of

Altona and Glen Iris Fire Stations.

COMPLIANCE WITH THE

BUILDING ACT

The MFB occupied property portfolio meets

the compliance requirements of the Building

Act 1993.

NATIONAL COMPETITION POLICY

The relevant part of the policy is in Part

IV of the (Restrictive Trade Practices) of

the Competition and Consumer Act 2010

(Cwlth). MFB activities affected by the

Victorian Government’s Competitive Neutrality

Policy have been reviewed and found to be

compliant.

FREEDOM OF INFORMATION

ACT 1982

The Chief Executive Ofﬁcer, Mr James Higgins,

is the Principal Ofﬁcer for the purpose of

administering the requirements of the Freedom

of Information Act 1982. The authorised

ofﬁcers are Ms Jan Smith, Freedom of

Information Ofﬁcer and Ms Militsa Toskovska,

Manager Governance.

Requests to MFB for access to documents

under the Freedom of Information Act must be

in writing and addressed to:

Freedom of Information Ofﬁcer

Metropolitan Fire and Emergency

Services Board

456 Albert Street

East Melbourne VIC 3002

Each application must clearly identify the

documents sought and be accompanied by

a $26.50 application fee (as at 1 July 2014).

General enquiries relating to freedom of

information can be made by contacting the

Freedom of Information Ofﬁcer on telephone

9662 2311 between 8.30 am and 5.00 pm,

Monday to Friday.

Enquiries about the information required to

be published and made available to members

of the public in accordance with sections

7, 8 and 11 of the Freedom of Information

Act should be directed to the Freedom of

Information Ofﬁcer.

2013–14 FOI STATISTICS

During the year MFB received 344 requests for

access to documents under the Freedom of

Information Act.

Requests received 344

Access granted 2

Part access 336

Denied 6

Applicant did not proceed 0

Not ﬁnalised as at 30 June 2014 1

Appeal Avenues

Internal Review 0

FOI Commissioner 1

VCAT Hearing 0

PROTECTED DISCLOSURE ACT

2012

The Corporate Secretary, Mr Blair Trask, is

the Protected Disclosure Coordinator for the

purpose of administering the requirements of

the Protected Disclosure Act 2012, (previously

the Whistleblowers Protection Act 2001).

Ms Militsa Toskovska is the Protected

Disclosure Ofﬁcer.

In accordance with the requirements of section

58 of the Protected Disclosure Act, MFB

has established a policy and guidelines for

responding to disclosures lodged. These are

available on the website www.mfb.vic.gov.au

CORPORATE

GOVERNANCE

STATEMENT continued

MFB Annual Report 2013–14 37

ADDITIONAL INFORMATION

AVAILABLE ON REQUEST

In compliance with the requirements of the

Standing Directions of the Minister for Finance,

details in respect of the information items

below have been retained by MFB and are

available on request (subject to freedom of

information requirements, if applicable):

(a) a statement that declarations of pecuniary

interests have been duly completed by all

relevant ofﬁcers of the agency

(b) details of shares held by senior ofﬁcers as

nominee or held beneﬁcially in a subsidiary

agency about its activities and where they

can be obtained

(d) details of changes in prices, fees, charges,

rates and levies charged by the agency

for its services, including services that are

administered

(e) details of any major external reviews

carried out in respect of the operation of

the agency

(f) details of any other research and

development activities undertaken by the

agency that are not otherwise covered

either in the report of operations or in a

document which contains the ﬁnancial

statement and report of operations

(g) details of overseas visits undertaken

including a summary of the objectives and

outcomes of each visit

(h) details of major promotional, public

relations and marketing activities

undertaken by the agency to develop

community awareness of the services

provided by the agency

(i) details of assessments and measures

undertaken to improve the occupational

health and safety of employees, not

otherwise detailed in the report of

operations

(j) a general statement on industrial relations

within the agency and details of time lost

through industrial accidents and disputes,

which are not otherwise detailed in the

report of operations

(k) a list of major committees sponsored

by the agency, the purposes of each

committee and the extent to which the

purposes have been achieved.

The information is available on request from:

MFB Headquarters

456 Albert Street

East Melbourne VIC 3002

(03) 9662 2311

CORPORATE

GOVERNANCE

STATEMENT continued

38 MFB Annual Report 2013–14

Disclosures 2013–14 2012–13

Protected disclosures lodged 0 0

Referred by MFB to the Ombudsman or IBAC for determination

as to whether they were public interest disclosures 0 0

Disclosed matters referred to MFB by the Ombudsman or IBAC 0 0

Disclosed matters referred by MFB to the Ombudsman or IBAC

for investigation 0 0

Investigations of disclosed matters taken over by the

Ombudsman or IBAC from MFB 0 0

Requests made under section 74 (requests to Ombudsman by

person making disclosure) during the year to the Ombudsman to

investigate disclosed matters

0 0

Disclosed matters that MFB declined to investigate 0 0

Disclosed matters substantiated on investigation 0 0

Recommendations of the Ombudsman under the Act 0 8

Table 12: Disclosures

MFB Annual Report 2014–15 39

Metropolitan Fire and Emergency Services Board

FINANCIAL REPORT 2014–15

DISCUSSION AND ANALYSIS

Comprehensive operating statement

The net result for 2013–14 was a surplus of

$2 million which compares to the $1 million

surplus in 2012–13; this result has been

achieved in an external environment of low

interest rates and internal cost pressures.

MFB have established and executed a ﬁnancial

sustainability strategy to achieve increased

efﬁciency over expenditure, optimise revenue

streams and better manage the deployment of

capital without impacting on front line services.

During the ﬁnancial year, MFB incurred a

number of signiﬁcant costs associated with

the summer ﬁre season. This participation

with other emergency services organisations;

which is part of a more joined up approach

to emergency management at regional and

interstate incidents including the signiﬁcant

Hazelwood coal seam ﬁre, signiﬁcantly

impacted salaries, overtime and operating

costs. These costs, excepting those relating

to the NSW ﬁres, were recovered by a

Treasurer’s Advance from the State of Victoria

of over $12 million.

Additionally, asbestos identiﬁed at the Eastern

Hill and Thornbury Complexes was removed

and the sites remediated which resulted in

unplanned expenditure in excess of $4 million.

The comprehensive result for the 2013–14

ﬁnancial year was a $2 million surplus as

compared to a comprehensive surplus of $20

million for 2012–13. The reduction reﬂects

that the prior ﬁnancial year included the $19.8

million building revaluation gain, whereas

in the current ﬁnancial year there were no

revaluations of property, plant or equipment.

Total operating transactional income for

2013–14 was $375 million, an increase of $22

million on 2012–13. The increase accounts for

the inclusion of the Treasurer’s Advance ($12

million) and the 2.5 per cent indexation applied

to State grants that replaced the previous

funding source of contributions. Grant income

was also adjusted to account for broker and

property owner contributions replaced by the

new Fire Service Levy (FSL). Sales of goods

and services increased $2 million due to

increased ﬁre equipment services and sales

and false alarm call charges. Interest and

dividend income reduced by approximately

$2 million due to reduced market interest

rates coupled with reduced average term

investment balances.

Total operating transactional expenses for

the ﬁnancial year increased from $352 million

(2012–13) to $373 million (2013–14), an

increase of $21 million (6 per cent) which

reﬂects increased employee expenses of

$13 million relating signiﬁcantly to additional

overtime at the Hazelwood coal seam ﬁre

and regional ﬁres ($6.7 million), award salary

increases, increased superannuation, payroll

tax and WorkCover expenses. Operating

expenses also reﬂect increased depreciation

of $2 million impacted by the new Victorian

Emergency Management Training Centre

(VEMTC) and other operating expenditure

which increased by $6 million due signiﬁcantly

to the asbestos remediation matter.

Overtime expenditure recorded an overall

increase due to MFB involvement at the

Hazelwood and regional ﬁres. However, after

adjusting for this one-off event overtime cost

in reality declined for the second successive

reporting period.

40 MFB Annual Report 2013–14

MANAGEMENT

Other economic ﬂows included in

net result

Included in the comprehensive surplus were

net gains pertaining to other economic ﬂows

of $2 million representing a loss on non-

ﬁnancial assets of $0.4 million consisting

of an impairment loss on property and

the amortisation of the optic ﬁbre licence

agreements; offset by a revaluation gain of

$0.6 million in employee leave provisions

caused by changes in long term discount

rates and a marginal revaluation loss on

ﬁnancial investments reﬂecting the year end

fair market valuations.

In accordance with accounting standards,

all property, plant and equipment were

reviewed for impairment and for fair value;

subsequent to this review, no revaluations

were recorded in 2013–14 as reported values

materially reﬂected fair values; whereas in the

prior reporting period buildings were re-valued

resulting in a $19.8 million asset revaluation

surplus adjustment.

Balance sheet

Total assets as at 30 June 2014 were

$708 million which is an increase of $5

million on the prior ﬁnancial year. Property,

plant and equipment increased overall by

$32 million after including investment property

holdings. This relates to an increased capital

investment program of $61 million in ﬁre

stations, ﬁre ﬁghting appliances, equipment

and technology and the completion of the

VEMTC at Craigieburn.

As a consequence of this increased capital

investment, term deposit investments held with

Treasury Corporation Victoria and operating

bank deposits reduced by $30 million to $29

million in 2013–14. The investment portfolio

managed by Victorian Funds Management

Corporation increased due to reinvested

earnings and market valuations by $5 million

to a total investment of $114 million as at

30 June 2014.

Total Liabilities as at 30 June 2014 were

$129 million, an increase of $3 million on the

prior ﬁnancial year reﬂecting the increase in

employee leave provisions related to award

salary increases, a marginal increase in leave

entitlement hours and leave accrued pertaining

to the Hazelwood ﬁre.

Net Assets as at 30 June 2014 were $578

million as compared to $576 million as at

30 June 2013 allowing for the comprehensive

result of the $2 million surplus.

Statement of balance sheet ratios

• Proprietary ratio (total equity to total

assets). As at 30 June 2014 this ratio

is unchanged at 82 per cent (82 per cent

as at 30 June 2013).

• Debt ratio (total liabilities to total assets). As

at 30 June 2014 this ratio is

unchanged at 18 per cent (18 per cent

as at 30 June 2013).

Pages 40 and 41 inclusive are not part of

the ﬁnancial statements considered in the

Audit opinion issued by the Victorian Auditor-

General’s Ofﬁce.

MFB Annual Report 2013–14 41

MANAGEMENT

COMPREHENSIVE OPERATING STATEMENT

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

42 MFB Annual Report 2013–14

Notes 2014 2013

$000 $000

Income from transactions

Grants 2 329,695 –

Contributions 2 1,739 309,248

Sales of goods and services 2 32,041 29,722

Other income 2 11,997 13,765

Total income from transactions 375,472 352,735

Expenses from transactions

Employee expenses 3 264,027 251,185

Depreciation and amortisation 3, 9, 11 22,471 20,189

Other operating expenses 3 86,902 80,526

Total expenses from transactions 373,400 351,900

Net result from transactions (net operating balance) 2,072 835

Other economic ﬂows included in net result

Net (loss) on non-ﬁnancial assets 4 (439) (1,422)

Net (loss) on ﬁnancial instruments 4 (187) (1,030)

Net gain from revaluation of employee leave liabilities 4 601 2,620

Total other economic ﬂows included in net result (25) 168

Net result 19 2,047 1,003

Other economic ﬂows – other comprehensive income

Items that will not be reclassiﬁed to net result

Changes in physical asset revaluation surplus 19 – 19,826

Total other economic ﬂows – other comprehensive income – 19,826

Comprehensive result 2,047 20,829

The comprehensive operating statement should be read in conjunction with the notes to the

ﬁnancial statements included on pages 46 to 94.

BALANCE SHEET

AS AT 30 JUNE 2014

MFB Annual Report 2013–14 43

Notes 2014 2013

$000 $000

ASSETS

Financial assets

Cash and deposits 12, 20 29,235 9,431

Receivables 5 7,146 9,785

Investment ﬁnancial assets 12 114,014 159,275

Total ﬁnancial assets 150,395 178,491

Non-ﬁnancial assets

Inventories 6 879 1,007

Physical assets classiﬁed as held for sale 7 3,284 3,180

Other non-ﬁnancial assets 8 4,111 1,709

Investment property 10 9,094 –

Property, plant and equipment 9 529,934 507,576

Intangible assets 11 10,425 11,150

Total non-ﬁnancial assets 557,727 524,622

Total assets 708,122 703,113

LIABILITIES

Payables 13 19,623 20,254

Provisions 14 107,678 104,020

Other liabilities 15 2,075 2,140

Total liabilities 129,376 126,414

Net assets 578,746 576,699

EQUITY

Accumulated surplus 19 234,281 232,234

Physical asset revaluation surplus 19 222,688 222,688

Contributed capital 19 121,777 121,777

Net worth 578,746 576,699

Commitments for expenditure 17

Contingent assets and contingent liabilities 18

The balance sheet should be read in conjunction with the notes to the ﬁnancial statements

included on pages 46 to 94.

44 MFB Annual Report 2013–14

Notes Physical Accumulated Contributions Total

Asset Surplus Capital

Revaluation

Surplus

$000 $000 $000 $000

Balance at 1 July 2012 202,862 231,231 121,777 555,870

Net result for the year – 1,003 – 1,003

Other comprehensive income

for the year 19,826 – – 19,826

Balance at 30 June 2013 19 222,688 232,234 121,777 576,699

Net result for the year – 2,047 – 2,047

Other comprehensive income

for the year – – – –

Balance at 30 June 2014 19 222,688 234,281 121,777 578,746

The statement of changes in equity should be read in conjunction with the notes to the ﬁnancial

statements included on pages 46 to 94.

STATEMENT OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

MFB Annual Report 2013–14 45

CASH FLOW STATEMENT

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Notes 2014 2013

$000 $000

Cash ﬂows from operating activities

Receipts

Receipts from Government 329,695 37,839

Receipts from other entities 43,297 305,622

Interest received 5,089 7,611

Dividends received 2,095 1,662

Goods and services tax recovered from the ATO (i) 14,901 10,092

Total receipts 395,077 362,826

Payments

Payments to suppliers and employees including legislative

payments and tax (366,394) (340,349)

Total payments (366,394) (340,349)

Net cash ﬂows from/(used in) operating activities 20(b) 28,683 22,477

Cash ﬂows from investing activities

Payments for investments (10,216) (38,054)

Proceeds from sale of investments 55,076 52,789

Purchases of non-ﬁnancial assets (58,466) (45,575)

Sales of non-ﬁnancial assets 4,727 828

Net cash ﬂows from/(used in) investing activities (8,879) (30,012)

Net (decrease)/increase in cash and cash equivalents 19,804 (7,535)

Cash and cash equivalents at beginning of ﬁnancial year 9,431 16,966

Cash and cash equivalents at end of ﬁnancial year 20(a) 29,235 9,431

The cash ﬂow statement should be read in conjunction with the notes to the ﬁnancial statements

included on pages 46 to 94.

(i) Goods and Services Tax

received from the ATO is

presented on a net basis.

46 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Notes to the ﬁnancial statements

Note 1. Summary of signiﬁcant accounting policies 47

Note 2. Income from transactions 62

Note 3. Expenses from transactions 63

Note 4. Other economic ﬂows included in net result 64

Note 5. Receivables 64

Note 6. Inventories 65

Note 7. Non-ﬁnancial assets classiﬁed as held for sale 66

Note 8. Other non-ﬁnancial assets 66

Note 9. Property, plant and equipment 67

Note 10. Investment property 72

Note 11. Intangible assets 73

Note 12. Financial instruments 74

Note 13. Payables 82

Note 14. Provisions 83

Note 15. Other liabilities 84

Note 16. Superannuation 84

Note 17. Commitments for expenditure 85

Note 18. Contingent assets and contingent liabilities 85

Note 19. Equity 86

Note 20. Notes to the cash ﬂow statement 87

Note 21. Bank overdraft 87

Note 22. Responsible persons 88

Note 23. Remuneration of executive ofﬁcers and payments to other personnel 90

Note 24. Remuneration of auditors 91

Note 25. Subsequent events 91

Note 26. Glossary of terms and style conventions 92

1. SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

These annual ﬁnancial statements represent

the audited general purpose ﬁnancial

statements for the Metropolitan Fire and

Emergency Services Board (MFB) for the

period ended 30 June 2014. The purpose of

the report is to provide users with information

about MFB’s stewardship of resources

entrusted to it.

(A) Statement of compliance

These general purpose ﬁnancial statements

have been prepared in accordance with

the Financial Management Act 1994 (FMA),

applicable Financial Reporting Directions

and Australian Accounting Standards

(AAS), which include Interpretations, issued

by the Australian Accounting Standards

Board (AASB). In particular, they are

presented in a manner consistent with the

requirements of the AASB 1049 Whole

of Government and General Government

Sector Financial Reporting.

Where appropriate, those AAS paragraphs

applicable to not-for-proﬁt entities have

been applied.

Accounting policies are selected and

applied in a manner which ensures that

the resulting ﬁnancial information satisﬁes

the concepts of relevance and reliability,

thereby ensuring that the substance of the

underlying transactions or other events is

reported.

To gain a better understanding of the

terminology used in this report a glossary

of terms and style conventions can be

found in Note 26.

These annual ﬁnancial statements were

authorised for issue by the Board on

12 August 2014.

(B) Basis of accounting preparation and

measurement

The accrual basis of accounting has

been applied in the preparation of these

ﬁnancial statements whereby assets,

liabilities, equity, income and expenses are

recognised in the reporting period to which

they relate, regardless of when cash is

received or paid.

Judgements, estimates and assumptions

are required to be made about carrying

values of assets and liabilities that are not

readily apparent from other sources. The

estimates and associated assumptions are

based on professional judgements derived

from historical experience and various other

factors that are believed to be reasonable

under the circumstances. Actual results may

differ from these estimates.

Revisions to accounting estimates are

recognised in the period in which the

estimate is revised and also in future

periods that are affected by the revision.

Judgements and assumptions made by

management in the application of AASs

that have signiﬁcant effects on the ﬁnancial

statements and estimates which relate to:

• the fair value of land, buildings,

infrastructure, plant and equipment (refer

to Note 1(K))

• superannuation expense (refer to Note

1(G))

• assumptions for employee beneﬁt

provisions based on likely tenure of

existing staff, patterns of leave claims,

future salary movements and future

discount rates (refer to Note 1(L))

• asset useful lives and asset impairment.

These ﬁnancial statements are presented

in Australian dollars, and prepared in

accordance with the historical cost

convention except for:

• non-ﬁnancial physical assets which,

subsequent to acquisition, are measured

at a revalued amount being their fair

value at the date of the revaluation

less any subsequent accumulated

depreciation and subsequent impairment

losses. Revaluations are made with

sufﬁcient regularity to ensure that the

carrying amounts do not materially differ

from their fair value

• the fair value of an asset other than land

is generally based on its depreciated

replacement value

• derivative ﬁnancial instruments, managed

investment schemes, certain debt

securities and investment properties after

initial recognition, which are measured

at fair value with changes reﬂected in the

comprehensive operating statement (fair

value through proﬁt and loss)

• certain liabilities that are calculated with

regard to actuarial assessments.

Consistent with AASB 13 Fair Value

Measurement, MFB determines the

policies and procedures for both recurring

fair value measurements such as property,

plant and equipment, investment

properties and ﬁnancial instruments and

for non-recurring fair value measurements

such as non-ﬁnancial physical assets

held for sale, in accordance with the

requirements of AASB 13 and the relevant

Financial Reporting Directions.

MFB Annual Report 2013–14 47

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

All assets and liabilities for which fair value

is measured or disclosed in the ﬁnancial

statements are categorised within the

fair value hierarchy, described as follows,

based on the lowest level input that is

signiﬁcant to the fair value measurement as

a whole:

• Level 1 – Quoted (unadjusted) market

prices in active markets for identical

assets or liabilities

• Level 2 – Valuation techniques for which

the lowest level input that is signiﬁcant to

the fair value measurement is directly or

indirectly observable

• Level 3 – Valuation techniques for which

the lowest level input that is signiﬁcant

to the fair value measurement is

unobservable.

For the purpose of fair value disclosures,

MFB has determined classes of assets

and liabilities on the basis of the nature,

characteristics and risks of the asset

or liability and the level of the fair value

hierarchy as explained above.

In addition, MFB determines whether

transfers have occurred between

levels in the hierarchy by re-assessing

categorisation (based on the lowest level

input that is signiﬁcant to the fair value

measurement as a whole) at the end of

each reporting period.

The Valuer-General Victoria (VGV) is MFB’s

independent valuation agency.

MFB, in conjunction with VGV, monitors

changes in the fair value of each asset and

liability through relevant data sources to

determine whether revaluation is required.

MFB monitors changes in the fair value

of land, including specialised land, by

applying annual VGV indices movements.

The fair value of specialised buildings is

annually monitored using the depreciated

replacement cost method with reference

to current replacement values supplied by

external building cost consultants Westbay

Consulting. The fair value of emergency

response appliance vehicles is monitored

by reference to an external supplier advice

on current replacement costs which

are monitored using the depreciated

replacement cost method.

The ﬁnancial statements cover MFB as

an individual reporting entity. MFB is a

statutory authority and operates under the

Metropolitan Fire Brigades Act 1958.

Its principal address is:

456 Albert Street

East Melbourne VIC 3002

The ﬁnancial statements include all the

controlled activities of MFB.

Objectives and Funding

The organisation provides comprehensive

ﬁre, rescue and emergency response

services to almost four million residents

within the metropolitan district with the

key objective to reduce the incidence and

impact of ﬁre and other emergencies on

the community.

Prior to 1 July 2013, MFB was signiﬁcantly

funded through contributions from

insurance companies, municipal councils

and the State Government.

On 1 July 2013, the new Fire Services Levy

was introduced whereby property owners,

including local municipal councils, remit

the levy to the State Revenue Ofﬁce. The

State Government determine the annual

grant funding for MFB which is detailed in

this report.

Further details of MFB’s operations and

principal activities are included in the report

of operations which does not form part of

these ﬁnancial statements.

(D) Scope and presentation of ﬁnancial

statements

Comprehensive operating statement

The comprehensive operating statement

comprises three components, being

‘net result from transactions’ (or termed

as ‘net operating balance’), ‘other

economic ﬂows included in net result’,

as well as ‘other economic ﬂows – other

comprehensive income’. The sum of the

former two, together with the net result

from discontinued operations, represents

the net result.

The net result is equivalent to proﬁt or loss

derived in accordance with AASs.

This classiﬁcation is consistent with the

whole of government reporting format and

is allowed under AASB 101 Presentation of

Financial Statements.

Balance sheet

Assets and liabilities are presented in

liquidity order with assets aggregated into

ﬁnancial assets and non-ﬁnancial assets.

Current and non-current assets and

liabilities (non-current being those assets

or liabilities expected to be recovered or

settled more than 12 months after the

reporting period) are disclosed in the notes,

where relevant.

48 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Cash ﬂow statement

Cash ﬂows are classiﬁed according

to whether or not they arise from

operating, investing or ﬁnancing activities.

This classiﬁcation is consistent with

requirements under AASB 107 Statement

of Cash Flows.

Statement of changes in equity

The statement of changes in equity

presents reconciliations of non-owner and

owner changes in equity from opening

balances at the beginning of the reporting

period to the closing balances at the end

of the reporting period. It also shows

separately changes due to amounts

recognised in the ‘Comprehensive result’

and amounts related to ‘Transactions with

owner in its capacity as owner’.

Rounding

Amounts in the ﬁnancial statements

(including the notes) have been rounded

to the nearest thousand dollars, unless

otherwise stated. Figures in the ﬁnancial

statements may not equate due to

rounding.

(E) Changes in accounting policies

Subsequent to the 2012–13 reporting

period, the following new and revised

Standards have been adopted in the

current period with their ﬁnancial impact

detailed as below.

AASB 13 Fair Value Measurement

AASB 13 establishes a single source of

guidance for all fair value measurements.

AASB 13 does not change when MFB

is required to use fair value, but rather

provides guidance on how to measure

fair value under Australian Accounting

Standards when fair value is required

or permitted. MFB has considered the

speciﬁc requirements relating to highest

and best use, valuation premise, and

principal (or most advantageous) market.

The methods, assumptions, processes and

procedures for determining fair value were

revisited and adjusted where applicable. In

light of AASB 13, MFB has reviewed the

fair value principles as well as its current

valuation methodologies in assessing

the fair value, and the assessment has

not materially changed the fair values

recognised.

However, AASB 13 has predominantly

impacted the disclosures of MFB. It

requires speciﬁc disclosures about fair

value measurements and disclosures of

fair values, some of which replace existing

disclosure requirements in other standards,

including AASB 7 Financial Instruments:

Disclosures.

The disclosure requirements of AASB

13 apply prospectively and need not be

applied in comparative information before

ﬁrst application. Consequently, the 2012–

13 comparatives of these disclosures have

not been provided, except for ﬁnancial

instruments, of which the fair value

disclosures are required under AASB 7

Financial Instruments: Disclosures.

AASB 119 Employee beneﬁts

In 2013–14, MFB has applied AASB 119

Employee beneﬁts (September 2011, as

amended) and the related consequential

amendments for the ﬁrst time.

The revised AASB 119 changes the

accounting for deﬁned beneﬁt plans and

termination beneﬁts. The most signiﬁcant

change relates to the accounting for

changes in deﬁned beneﬁt obligation and

plan assets. As the current accounting

policy is for the Department of Treasury

and Finance to recognise and disclose

the State’s deﬁned beneﬁt liabilities in its

ﬁnancial statements, changes in deﬁned

beneﬁt obligations and plan assets will

have limited impact on MFB.

The revised standard also changes the

deﬁnition of short-term employee beneﬁts.

These were previously beneﬁts that were

expected to be settled within 12 months

after the end of the reporting period in

which the employees render the related

service, however, short-term employee

beneﬁts are now deﬁned as beneﬁts

expected to be settled wholly within 12

months after the end of the reporting

period in which the employees render the

related service.

MFB application of AASB 19 Employee

Beneﬁts in past and the current ﬁnancial

period has been on the basis of short term

employee beneﬁts being wholly settled

or taken within 12 months from the end

of the reporting period. Accordingly the

revised standard has had no impact on the

measurement or reporting of the annual

and accrued leave provision, subsequently

the prior year (2012–13) did not require

restatement upon release of the revised

standard.

(F) Income from transactions

Income is recognised to the extent that it

is probable that the economic beneﬁts will

ﬂow to the entity and the income can be

reliably measured.

Income recognition

Income is recognised for each of MFB’s

major activities as follows:

MFB Annual Report 2013–14 49

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Grants

Income from grants (other than contribution

by owners) is recognised when MFB

obtains control over the contribution.

For reciprocal grants (ie. equal value is

given back by MFB to the provider), MFB

is deemed to have assumed control

when MFB has satisﬁed its performance

obligations under the terms of the grant.

For non-reciprocal grants, MFB is deemed

to have assumed control when the grant

is receivable or received. Conditional

grants may be reciprocal or non-reciprocal

depending on the terms of the grant.

Contributions

In the 2012–13 ﬁnancial year, Statutory

contributions were determined for the

ﬁnancial year under Section 37 of the

Metropolitan Fire Brigades Act 1958

and comprised one-eighth from the

State Government, one-eighth from the

Municipal Councils whose districts are

within, or partly within, the metropolitan

district and three-quarters from insurance

companies insuring ﬁre risk against

property situated within the metropolitan

district. Contributions income was

recognised in the ﬁnancial year to which

the determination under Section 37

applies.

Effective 1 July 2013, the Fire Services

Levy was removed from insurance

premiums and is collected through

council rates. Subsequent to 1 July 2013,

metropolitan councils contribute to the Fire

Services Property Levy like other property

owners and the State government will

continue to make a contribution via a grant

from consolidated revenue.

Sale of goods and services

Income from the supply of services

Income from the supply of services is

recognised by reference to the stage

of completion of the services being

performed. The income is recognised

when:

• the amount of the income, stage of

completion and transaction costs

incurred can be reliably measured

• it is probable that the economic beneﬁts

associated with the transaction will ﬂow

to MFB.

Under the stage of completion method,

income is recognised by reference to

labour hours supplied or to labour hours

supplied as a percentage of total services

to be performed in each annual reporting

period.

Income from sale of goods

Income from the sale of goods is

recognised when:

• MFB no longer has any of the signiﬁcant

risks and rewards of ownership of the

goods transferred to the buyer

• MFB no longer has continuing

managerial involvement to the degree

usually associated with ownership, nor

effective control over the goods sold

• the amount of income and the costs

incurred or to be incurred in respect

of the transactions, can be reliably

measured

• it is probable that the economic beneﬁts

associated with the transaction will ﬂow

to MFB.

Sale of goods and services includes

regulatory fees which are recognised at the

time the regulatory fee is billed.

Other income

Dividend income

Dividend income is recognised when the

right to receive payment is established.

Interest income

Interest includes interest received on bank

deposits, term deposits with Treasury

Corporation Victoria (TCV), and other

investments and the unwinding over time

of the discount on ﬁnancial assets. Interest

income is recognised using the effective

interest method which allocates the interest

over the relevant period.

Net realised and unrealised gains and

losses on the revaluation of investments do

not form part of income from transactions,

but are reported either as part of income

from other economic ﬂows in the net result

or as unrealised gains or losses taken

directly to equity, forming part of the total

change in net worth in the comprehensive

result.

Sale of real property – land and

buildings

The gross proceeds from the sale of real

property are classiﬁed as income at the

date control of the asset passes to the

buyer, usually when an unconditional

contract of sale is signed. The depreciated

cost of the asset is classiﬁed as an

expense.

Sale of plant and equipment

The gross proceeds of plant and

equipment sales are included as income

at the date control of the asset passes to

the buyer, usually when an unconditional

contract of sale is signed.

50 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

The gain or loss on disposal is calculated

as the difference between the carrying

amount of the asset at the time of disposal

and net proceeds on disposal.

(G) Expenses from transactions

Expenses are recognised as they are

incurred, and reported in the ﬁnancial year

to which they relate.

Employee expenses

Employee beneﬁts expenses include all costs

related to employment including wages and

salaries, leave entitlements, redundancy

payments, WorkCover premiums and

superannuation contributions.

Employee expenses include

superannuation expenses which are

reported differently depending upon

whether employees are members of

deﬁned beneﬁt or deﬁned contribution

plans. In relation to deﬁned contribution (ie.

accumulation) superannuation plans, the

associated expense is simply the employer

contributions that are paid or payable in

respect of employees who are members

of these plans during the reporting period.

Employer superannuation expenses in

relation to employees who are members of

deﬁned beneﬁt superannuation plans are

described below.

Superannuation – Emergency Services

and State Superannuation deﬁned

beneﬁt plans

The amount recognised in the

comprehensive operating statement

in relation to employer contributions

for members of the deﬁned beneﬁt

superannuation plans is simply the employer

contributions that are paid or payable to

these plans during the reporting period.

The Department of Treasury and Finance

(DTF) in their Annual Financial Statements

disclose on behalf of the State as the

sponsoring employer, the net deﬁned

beneﬁt cost related to the members of

these plans as an administered liability.

Refer to DTF’s Annual Financial Statements

for more detailed disclosures in relation to

these plans.

Depreciation and amortisation

All buildings, plant and equipment and

other non-ﬁnancial physical assets

(excluding items under operating leases,

assets held for sale, land and investment

properties) that have ﬁnite useful lives are

depreciated. Depreciation is generally

calculated on a straight-line basis, at rates

that allocate the asset’s value, less any

estimated residual value, over its estimated

useful life.

Leasehold improvements are depreciated

over the period of the lease or estimated

useful life, whichever is the shorter,

using the straight line method. The

estimated useful lives, residual values and

depreciation method are reviewed at the

end of each annual reporting period and

adjustments made where appropriate.

The following estimated useful lives are

used in the calculation of depreciation for

the current and prior year:

2014

Buildings 40 years

VEMTC training props 20 years

Plant and equipment 3 – 15 years

Land has an indeﬁnite life and is not

depreciated. Depreciation is not recognised

in respect of this asset as its service

potential has not, in any material sense,

been consumed during the reporting

period.

Intangible produced assets with ﬁnite

useful lives are amortised as an expense

from transactions on a straight-line basis

over the asset’s useful life. Amortisation

begins when the asset is available for

use, that is, when it is in the location and

condition necessary for it to be capable

of operating in the manner intended by

management.

The average lives and remaining lives on

intangible assets are:

2014 2013

Average Remaining Remaining

Life Life Life

Optic ﬁbre

licence

agreements: 15 years 6 years 7 years

Software: 5–7 years 1–5 years 1–6 years

On the other hand, the consumption

of intangible non-produced assets

with ﬁnite useful lives is not classiﬁed

as a transaction, but as amortisation.

Consequently, the amortisation is included

as an other economic ﬂow in the net

result. The intangible assets held at period

close are classiﬁed as produced assets,

accordingly the amortisation is classiﬁed as

a transaction.

Intangible assets with indeﬁnite useful lives

are not amortised, but are tested annually

for impairment.

MFB Annual Report 2013–14 51

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Reclassiﬁcation of amortisation to

other economic ﬂows in 2012–13

In the prior reporting period ﬁnancial

statements (2012–13), the amortisation of

intangible non-produced assets relating to

the optic ﬁbre licence agreements totalling

$816,000 was inadvertently treated as

amortisation expense, instead of other

economic ﬂows expense (as per AASB 138

Intangible Assets). This has subsequently

been adjusted in these accounts for the

prior year (2012–13), the impact for the

2012–13 reporting period:

• amortisation expense reduced by

$816,000

• other economic ﬂows – net loss on non-

ﬁnancial assets increased by $816,000.

Other operating expenses

Other operating expenses generally

represent the day to day running costs

incurred in normal operations and include:

Supplies and services

Supplies and services costs are recognised

as an expense in the reporting period

in which they are incurred. The carrying

amounts of any inventories held for

distribution are expensed when distributed.

Bad and doubtful debts

Refer to Note 1(J) Impairment of ﬁnancial

assets.

Maintenance and repairs

Major plant and equipment is required

to be serviced on a regular basis. This

is managed as part of an ongoing

major cyclical maintenance program.

Maintenance costs are charged as

expenses as incurred, except where

they relate to the replacement of a major

component of an asset, in which case the

costs are capitalised and depreciated.

Other routine operating maintenance,

repair costs and minor plant renewals are

also charged as expenses as incurred.

(H) Other economic ﬂows included in the

net result

Other economic ﬂows measure the change

in volume or value of assets or liabilities

that do not result from transactions.

Net gain/(loss) on non-ﬁnancial assets

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

liabilities includes realised and unrealised

gains and losses as follows:

Revaluation gains/(losses) of non-

ﬁnancial physical assets

Refer to Note 1(K) Revaluations of non-

ﬁnancial physical assets.

Net gain/(loss) on disposal of non-

ﬁnancial assets

Any gain or loss on the disposal of non-

ﬁnancial assets is recognised at the date of

disposal and is determined after deducting

from the proceeds the carrying value of the

asset at that time.

Amortisation of non-produced

intangible assets

Intangible non-produced assets with ﬁnite

lives are amortised as an other economic

ﬂow on a systematic (typically straight-

line) basis over the asset’s useful life.

Amortisation begins when the asset is

available for use, that is, when it is in the

location and condition necessary for it to

be capable of operating in the manner

intended by management.

Impairment of non-ﬁnancial assets

Intangible assets with indeﬁnite useful lives

(and intangible assets not yet available for

use) are tested annually for impairment (as

described below) and whenever there is an

indication that the asset may be impaired.

All other assets are assessed annually for

indications of impairment, except for:

• inventories (refer Note 1(K))

• non-ﬁnancial physical assets held for

sale (refer Note 1(K))

• ﬁnancial assets (refer Note 1(J)).

If there is an indication of impairment,

the assets concerned are tested as to

whether their carrying value exceeds their

recoverable amount. Where an asset’s

carrying value exceeds its recoverable

amount, the difference is written off as

an other economic ﬂow, except to the

extent that the write-down can be debited

to an asset revaluation surplus amount

applicable to that class of asset.

If there is an indication that there has

been a change in the estimate of an

asset’s recoverable amount since the

last impairment loss was recognised, the

carrying amount shall be increased to its

recoverable amount. This reversal of the

impairment loss occurs only to the extent

that the asset’s carrying amount does not

exceed the carrying amount that would

have been determined, net of depreciation

or amortisation, if no impairment loss had

been recognised in prior years.

It is deemed that, in the event of the loss

or destruction of an asset, the future

economic beneﬁts arising from the use of

the asset will be replaced unless a speciﬁc

decision to the contrary has been made.

52 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

The recoverable amount for most assets

is measured at the higher of depreciated

replacement cost and fair value less costs

to sell. Recoverable amount for assets

held primarily to generate net cash inﬂows

is measured at the higher of the present

value of future cash ﬂows expected to be

obtained from the asset and fair value less

costs to sell.

Net gain/(loss) on ﬁnancial instruments

includes:

• realised and unrealised gains and losses

from revaluations of ﬁnancial instruments

at fair value

• impairment and reversal of impairment

for ﬁnancial instruments at amortised

cost; (refer Note 1(J))

• disposal of ﬁnancial assets and

derecognition of ﬁnancial liabilities.

Revaluations of ﬁnancial instruments

at fair value

Refer to Note 1(I) Financial Instruments.

Other gains/(losses) from other

economic ﬂows

Other gains/(losses) from other economic

ﬂows include the gains or losses from:

• the revaluation of the present value of the

leave liability due to changes in the bond

interest rates

• transfer of amounts from the reserves

to accumulated surplus or net result

due to disposal or de-recognition or

reclassiﬁcation.

(I) Financial instruments

Financial instruments arise out of

contractual agreements that give rise

to a ﬁnancial asset of one entity and a

ﬁnancial liability or equity instrument of

another entity. Due to the nature of MFB’s

activities, certain ﬁnancial assets and

ﬁnancial liabilities arise under statute rather

than a contract. Such ﬁnancial assets

and ﬁnancial liabilities do not meet the

deﬁnition of ﬁnancial instruments in AASB

132 Financial Instruments: Presentation.

For example, statutory receivables arising

from taxes, ﬁnes and penalties do not meet

the deﬁnition of ﬁnancial instruments as

they do not arise under contract. However,

guarantees issued by the Treasurer on

behalf of MFB are ﬁnancial instruments

because, although authorised under

statute, the terms and conditions for each

ﬁnancial guarantee may vary and are

subject to an agreement.

Investments are recognised and

derecognised on trade date where

purchase or sale of an investment is under

a contract whose terms require delivery

of the investment within the timeframe

established by the market concerned and

are initially measured at fair value net of

transaction costs.

The classiﬁcation of ﬁnancial instruments

depends on the purpose for which the

investments were acquired. Management

determines the classiﬁcation of its

investments at initial recognition.

Where relevant, for note disclosure

purposes, a distinction is made between

those ﬁnancial assets and ﬁnancial

liabilities that meet the deﬁnition of ﬁnancial

instruments in accordance with AASB 132

and those that do not.

The following refers to ﬁnancial instruments

unless otherwise stated.

Loans and receivables

Loans and receivables are ﬁnancial

instrument assets with ﬁxed and

determinable payments that are not quoted

on an active market. These assets are

initially recognised at fair value plus any

directly attributable transaction costs.

Subsequent to initial measurement, loans

and receivables are measured at amortised

cost using the effective interest method,

less any impairment.

Loans and receivables category includes

cash and deposits (refer to Note 1(J)), term

deposits with maturity greater than three

months, trade receivables, loans and other

receivables, but not statutory receivables.

Held-to-maturity ﬁnancial assets

If MFB has the positive intent and ability to

hold nominated investments to maturity,

then such ﬁnancial assets may be classiﬁed

as held-to-maturity. Held-to-maturity

ﬁnancial assets are recognised initially

at fair value plus any directly attributable

transaction costs. Subsequent to initial

recognition held-to-maturity ﬁnancial assets

are measured at amortised cost using

the effective interest method, less any

impairment losses.

The held-to-maturity category includes

certain term deposits and debt securities

for which MFB intends to hold to maturity.

Held-to-maturity ﬁnancial assets relate to

investments which MFB have the intention

to hold to maturity.

MFB Annual Report 2013–14 53

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

AASBs require speciﬁc treatment should

MFB reclassify more than an insigniﬁcant

amount of held-to-maturity investments not

close to their maturity which would result

in the whole category being reclassiﬁed

as available-for-sale. MFB would also be

prevented from classifying investment

securities as held-to-maturity for the

current and the following two ﬁnancial

years.

Financial assets and liabilities at fair

value through proﬁt or loss

Financial assets are categorised as fair value

through proﬁt or loss at trade date if they are

classiﬁed as held for trading or designated

as such upon initial recognition. Financial

instrument assets are designated at fair

value through proﬁt or loss on the basis that

the ﬁnancial assets form part of a group

of ﬁnancial assets that are managed by

Victorian Funds Management Corporation

(VFMC) for MFB based on their fair values

and have their performance evaluated

in accordance with documented risk

management and investment strategies.

Financial instruments at fair value through

proﬁt or loss are initially measured at fair

value and attributable transaction costs

are expensed as incurred. Subsequently,

any changes in fair value are recognised

in the net result as other economic ﬂows.

Any dividend or interest on a ﬁnancial

asset is recognised in the net result from

transactions.

MFB uses VFMC as the ﬁnance manager

of its investment portfolio. VFMC adopts a

centralised asset management approach

to develop individual investment strategies

to maximise the probability of meeting

MFB’s individual risk proﬁle and investment

objectives.

Financial liabilities at amortised cost

Financial instrument liabilities are initially

recognised on the date they are originated.

They are initially measured at fair value

plus any directly attributable transaction

costs. Subsequent to initial recognition,

these ﬁnancial instruments are measured

at amortised cost with any difference

between the initial recognised amount and

the redemption value being recognised

in proﬁt and loss over the period of the

interest-bearing liability using the effective

interest rate method (refer to Note 26).

Financial instrument liabilities measured

at amortised cost include all of MFB

contractual payables, deposits held and

advances received and interest-bearing

arrangements other than those designated

at fair value through proﬁt or loss.

Offsetting ﬁnancial instruments

Financial instrument assets and liabilities

are offset and the net amount presented in

the consolidated balance sheet when and

only when, MFB has a legal right to offset

the amounts and intends either to settle on

a net basis or to realise the asset and settle

the liability simultaneously.

(J) Financial assets

Cash and deposits

Cash and deposits, including cash

equivalents, comprise cash on hand and

cash at bank, deposits at call and those

highly liquid investments with an original

maturity of three months or less, which

are held for the purpose of meeting short

term cash commitments rather than for

investment purposes and which are readily

convertible to known amounts of cash

and are subject to an insigniﬁcant risk of

changes in value.

Receivables

Receivables consist of:

• contractual receivables, such as debtors

in relation to goods and services and

accrued investment income

• statutory receivables, such as amounts

owing from the Victorian Government

and Goods and Services Tax (GST) input

tax credits recoverable.

Contractual receivables are classiﬁed as

ﬁnancial instruments and categorised

as loans and receivables (refer to Note

1(I) Financial Instruments for recognition

and measurement). Statutory receivables

are recognised and measured similarly

to contractual receivables (except for

impairment), but are not classiﬁed as

ﬁnancial instruments because they do not

arise from a contract.

Receivables are recognised at fair value

and less an allowance for impairment.

Receivables are subject to impairment

testing as described below. A provision for

doubtful receivables is recognised when

there is objective evidence that the debts

may not be collected, and bad debts are

written off when identiﬁed.

Investment and other ﬁnancial assets

Investments are classiﬁed in the following

categories:

• ﬁnancial assets at fair value through proﬁt

or loss

• loans and receivables

• held-to-maturity.

54 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

The classiﬁcation depends on the purpose

for which the investments were acquired.

Management determines the classiﬁcation

of its investments at initial recognition.

Any dividend or interest earned on

the ﬁnancial asset is recognised in the

comprehensive operating statement as a

transaction.

Derecognition of ﬁnancial assets

A ﬁnancial asset (or, where applicable, a

part of a ﬁnancial asset or part of a group

of similar ﬁnancial assets) is derecognised

when:

• the rights to receive cash ﬂows from the

asset have expired; or

• MFB retains the right to receive cash

ﬂows from the asset, but has assumed

an obligation to pay them in full without

material delay to a third party under a

‘pass through’ arrangement; or

• MFB has transferred its rights

to receive cash ﬂows from the asset

and either:

(a) has transferred substantially all the

risks and rewards of the asset; or

(b) has neither transferred nor retained

substantially all the risks and rewards

of the asset, but has transferred

control of the asset.

Where MFB has neither transferred nor

retained substantially all the risks and

rewards of transferred control, the asset

is recognised to the extent of MFB’s

continuing involvement in the asset.

Impairment of ﬁnancial assets

At the end of each reporting period,

MFB assesses whether there is objective

evidence that a ﬁnancial asset or group

of ﬁnancial assets is impaired. All ﬁnancial

instrument assets, except those measured

at fair value through proﬁt or loss, are

subject to annual review for impairment.

Receivables are assessed for bad and

doubtful debts on a regular basis. Those

bad debts considered as written off

by mutual consent are classiﬁed as a

transaction expense. Bad debts not written

off by mutual consent and the allowance

for doubtful receivables are classiﬁed as

other economic ﬂows in the net result.

The amount of the allowance is the

difference between the ﬁnancial asset’s

carrying amount and the present value of

estimated future cash ﬂows, discounted at

the effective interest rate.

In assessing impairment of statutory

(non-contractual) ﬁnancial assets, which

are not ﬁnancial instruments, professional

judgement is applied in assessing

materiality using estimates, averages

and other computational methods in

accordance with AASB 136 Impairment

of Assets.

(K) Non-ﬁnancial assets

Inventories

Inventories include goods and other

property held either for sale or for

distribution at zero or nominal cost, or for

consumption in the ordinary course of

business operations.

Inventories held for distribution are

measured at cost, adjusted for any loss

of service potential. All other inventories,

including land held for sale, are measured

at the lower of cost and net realisable

value. Where inventories are acquired for

no cost or nominal consideration, they are

measured at current replacement cost at

the date of acquisition.

Cost, includes an appropriate portion of

ﬁxed and variable overhead expenses.

Cost is assigned to land held for sale

(undeveloped, under development and

developed) and to other high value, low

volume inventory items on a speciﬁc

identiﬁcation of cost basis. Cost for all

other inventory is measured on the basis

of weighted average cost.

Non-ﬁnancial physical assets

classiﬁed as held for sale

Prepayments

Other non-ﬁnancial assets include

prepayments which represent payments

in advance of receipt of goods or services

or that part of expenditure made in

one accounting period covering a term

extending beyond that period.

Non-ﬁnancial physical assets are treated

as current and classiﬁed as held for sale

if their carrying amount will be recovered

through a sale transaction rather than

through continuing use.

This condition is regarded as met only

when:

• the asset is available for immediate use

in the current condition; and

• the sale is highly probable and the

asset’s sale is expected to be completed

in 12 months from the date of

classiﬁcation.

MFB Annual Report 2013–14 55

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

These non-ﬁnancial physical assets, related

liabilities and ﬁnancial assets are measured

at the lower of carrying amount and fair

value less costs to sell, and are not subject

to depreciation or amortisation.

Property, plant and equipment

All non-ﬁnancial physical assets are

measured initially at cost and subsequently

revalued at fair value less accumulated

depreciation and impairment.

Where an asset is received for no or

nominal cost, the cost is its fair value at the

date of acquisition.

Non-ﬁnancial physical assets such as land

and heritage assets are measured at fair

value with regard to the property’s highest

and best use after due consideration

is made for any legal or physical

restrictions imposed on the asset, public

announcements or commitments made in

relation to the intended use of the asset.

Theoretical opportunities that may be

available in relation to the asset are not

taken into account until it is virtually certain

that the restrictions will no longer apply.

Therefore, unless otherwise disclosed, the

current use of these non-ﬁnancial physical

assets will be their highest and best uses.

The fair value of plant, equipment and

appliance vehicles is normally determined

by reference to the asset’s depreciated

replacement cost. For plant, equipment

and passenger vehicles, existing

depreciated historical cost is generally

a reasonable proxy for depreciated

replacement cost because of the short

lives of the assets concerned.

The cost of constructed non-ﬁnancial

physical assets includes the cost of all

materials used in construction, direct

labour on the project and an appropriate

proportion of variable and ﬁxed overheads.

For the accounting policy on impairment

of non-ﬁnancial physical assets, refer to

impairment of non-ﬁnancial assets under

Note 1(H) Impairment of non-ﬁnancial

assets.

Leasehold improvements

The cost of leasehold improvements is

capitalised as an asset and depreciated

over the shorter of the remaining term of

the lease or the estimated useful life of the

improvements.

Revaluations of non-ﬁnancial

physical assets

Non-ﬁnancial physical assets are measured

at fair value on a cyclical basis, in

accordance with the Financial Reporting

Directions (FRDs) issued by the Minister for

Finance.

A full revaluation normally occurs every ﬁve

years, based upon the asset’s government

purpose classiﬁcation but may occur more

frequently if fair value assessments indicate

material changes in values. Independent

valuers are generally used to conduct

these scheduled revaluations. Any interim

revaluations are determined in accordance

with the requirements of the FRDs.

Revaluation increases or decreases arise

from differences between an asset’s

carrying value and fair value.

Net revaluation increases (where the

carrying amount of a class of assets is

increased as a result of a revaluation)

are recognised in ‘Other economic ﬂows

– other comprehensive income’ and

accumulated in equity under the asset

revaluation surplus. However, the net

revaluation increase is recognised in the

net result to the extent that it reverses a net

revaluation decrease in respect of the same

class of property, plant and equipment

previously recognised as an expense (other

economic ﬂows) in the net result.

Net revaluation decrease is recognised

in ‘Other economic ﬂows – other

comprehensive income’ to the extent

that a credit balance exists in the asset

revaluation surplus in respect of the same

class of property, plant and equipment.

Otherwise, the net revaluation decreases

are recognised immediately as other

economic ﬂows in the net result. The net

revaluation decrease recognised in ‘Other

economic ﬂows – other comprehensive

income’ reduces the amount accumulated

in equity under asset revaluation surplus.

Revaluation increases and decreases

relating to individual assets in a class of

property, plant and equipment, are offset

against one another in that class but are

not offset in respect of assets in different

classes. Any asset revaluation surplus is

not normally transferred to accumulated

funds on de-recognition of the relevant

asset.

Investment properties

Investment properties represent

properties held to earn rentals or for

capital appreciation, or both. Investment

properties exclude properties held to meet

service delivery objectives of MFB.

Investment properties are initially measured

at cost. Costs incurred subsequent to

initial acquisition are capitalised when it

is probable that future economic beneﬁts

in excess of the originally assessed

performance of the asset will ﬂow to MFB.

56 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Subject to initial recognition at cost,

investment properties are revalued to

fair value with changes in the fair value

recognised as other economic ﬂows in

the comprehensive operating statement

in the period that they arise. Fair values

are determined based on a market

comparable approach that reﬂects recent

transaction prices for similar properties.

These properties are neither depreciated

nor tested for impairment.

Rental income from the leasing of

investment properties is recognised in the

comprehensive operating statement on a

straight-line basis over the least term.

Intangible assets

Intangible assets are initially measured

at cost. Subsequently, intangible assets

with ﬁnite useful lives are carried at cost

less accumulated amortisation and

accumulated impairment losses. Costs

incurred subsequent to initial acquisition

are capitalised when it is expected that

additional future economic beneﬁts will ﬂow

to MFB.

When the recognition criteria in AASB

138 Intangible Assets are met, internally

generated intangible assets are recognised

and measured at cost less accumulated

amortisation and impairment.

An internally-generated intangible asset

arising from development (or from the

development phase of an internal project)

is recognised if, and only if, all of the

following are demonstrated:

(a) the technical feasibility of completing

the intangible asset so that it will be

available for use or sale

(b) an intention to complete the intangible

asset and use or sell it

asset

(d) the intangible asset will generate

probable future economic beneﬁts

(e) the availability of adequate technical,

ﬁnancial and other resources to

complete the development and to use

or see the intangible asset

(f) the ability to measure reliably the

expenditure attributable to the

intangible asset during its development.

Refer Note 1(G) Depreciation and

amortisation and Note 1(H) Impairment of

non-ﬁnancial assets.

(L) Liabilities

Payables

Payables consist of:

• contractual payables, such as accounts

payable. Accounts payable represent

liabilities for goods and services provided

to MFB prior to the end of the ﬁnancial

year that are unpaid and arise when

MFB becomes obliged to make future

payments in respect of the purchase of

those goods and services

• statutory payables, such as goods and

services tax and fringe beneﬁts tax

payables.

Contractual payables are classiﬁed as

ﬁnancial instruments and categorised

as ﬁnancial liabilities at amortised cost

(refer Note 1(I)). Statutory payables are

recognised and measured similarly to

contractual payables, but are not classiﬁed

as ﬁnancial instruments and not included

in the category of ﬁnancial liabilities at

amortised cost, because they do not arise

from a contract.

Other liabilities

At reporting date, other liabilities pertain

to income received in advance for

prepaid future access by the Country

Fire Authority (CFA) to MFB’s optical ﬁbre

communications network.

Provisions

Provisions are recognised when MFB has

a present obligation, the future sacriﬁce

of economic beneﬁts is probable and the

amount of the provision can be measured

reliably.

The amount recognised as a provision

is the best estimate of the consideration

required to settle the present obligation at

reporting period, taking into account the

risks and uncertainties surrounding the

obligation. Where a provision is measured

using the cash ﬂows estimated to settle

the present obligation, the carrying amount

is the present value of those cash ﬂows,

using discount rate that reﬂects the time

value of money and risks speciﬁc to the

provision.

Employee beneﬁts

Provision is made for beneﬁts accruing

to employees in respect of wages and

salaries, annual leave, accrued leave and

long service leave for services rendered to

the reporting date.

Wages and salaries and annual leave

Liabilities for wages and salaries, including

non-monetary beneﬁts annual leave are

recognised in the provision for employee

beneﬁts, as ‘current liabilities’, because

MFB does not have an unconditional right

to defer settlements of these liabilities.

MFB Annual Report 2013–14 57

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Depending on the expectation of the timing

of settlement, liabilities for wages and

salaries and annual leave are measured at:

• undiscounted value – if MFB expects to

wholly settle within 12 months; or

• present value – if MFB does not expect

to wholly settle within 12 months.

Accrued leave

Accrued leave is an employee leave beneﬁt

provided to operational staff when certain

conditions are met under the Enterprise

Agreement. This is recognised in the

provision for employee beneﬁts.

Long service leave

Liability for long service leave (LSL) is

recognised in the provision for employee

beneﬁts.

Unconditional LSL is disclosed in the notes

to the ﬁnancial statements as a current

liability even where MFB does not expect

to settle the liability within 12 months

because it will not have the unconditional

right to defer the settlement of the

entitlement should an employee take leave

within 12 months.

The components of the current LSL liability

are measured at:

• undiscounted value – if MFB expects to

wholly settle within 12 months; and

• present value – if MFB does not expect

to wholly settle within 12 months.

Conditional LSL is disclosed as a non-

current liability. There is an unconditional

right to defer the settlement of the

entitlement until the employee has

completed the requisite years of service.

This non-current LSL liability is measured

at present value.

Any gain or loss following revaluation of the

present value of non-current LSL liability

is recognised as a transaction, except to

the extent that a gain or loss arises due to

changes in bond interest rates for which it

is then recognised as an other economic

ﬂow (refer to Note 1(H)).

Termination beneﬁts

Termination beneﬁts are payable when

employment is terminated before the

normal retirement date, or when an

employee decides to accept voluntary

redundancy in exchange for these beneﬁts.

MFB recognises termination beneﬁts when

it is demonstrably committed to either

terminating the employment of current

employees according to a detailed formal

plan without possibility of withdrawal or

providing termination beneﬁts as a result

of an offer made to encourage voluntary

redundancy. Beneﬁts falling due more than

12 months after the end of the reporting

period are discounted to present value.

Bonus plans

A liability for bonus plans is recognised

in payables when there is no realistic

alternative but to settle the liability and at

least one of the following conditions is met:

• there are formal terms for determining

the amount of the beneﬁt

• the amounts to be paid are determined

before the time of completion of the

ﬁnancial statements

• past practice provides clear evidence of

the amount of the obligation.

Liabilities for bonus plans are expected

to be settled within 12 months and are

measured at the amount expected to be

paid when they are settled.

Employee beneﬁts on-costs

Employee beneﬁts on-costs such as

payroll tax, workers compensation and

superannuation are recognised separately

from the provision for employee beneﬁts.

Employee beneﬁt provisions

Employee beneﬁt provisions expected to

be settled beyond 12 months have been

apportioned on the basis of expected

settlement periods in the future and

adjusted to account for wage increases

and discounted to present value. The

average wage inﬂation factor applied

on annual leave is 4.44 per cent (2013:

4.50 per cent) and 4.44 per cent on long

service leave which also covers seniority,

promotion and other relevant factors

(2013: 4.50 per cent). The average end of

year discount rate applied was 3.57 per

cent (2013: 3.79 per cent). Discount rates

are supplied by the Department of Treasury

and Finance. Long service leave has been

applied over 12 years when calculating the

present value, as this reﬂects the current

circumstances of 9.00 per cent of leave

taken per annum.

(M) Leases

Operating leases – MFB as lessee

A lease is a right to use an asset for an

agreed period of time in exchange for

payment.

Operating lease payments, including any

contingent rentals, are recognised as an

expense in the comprehensive operating

statement on a straight-line basis over

the lease term, except where another

systematic basis is more representative

of the time pattern of the beneﬁts derived

from the use of the leased asset. The

leased asset is not recognised in the

balance sheet.

58 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

All incentives for the agreement of a new

or renewed operating lease are recognised

as an integral part of the net consideration

agreed for the use of the leased asset,

irrespective of the incentive’s nature or form

or the timing of payments.

In the event that lease incentives are

received to enter into operating leases,

the aggregate cost of incentives are

recognised as a reduction of rental

expense over the lease term on a straight-

line basis, unless another systematic basis

is more representative of the time pattern

in which economic beneﬁts from the leased

asset are consumed.

Operating leases – MFB as lessor

Rental income from operating leases is

recognised on a straight-line basis over the

term of the relevant lease.

(N) Equity

Contributions by owner

Additions to net assets which have been

designated as contributions by owners

are recognised as contributed capital.

Other transfers that are in the nature of

contributions or distributions have also

been designated as contributions by

owners.

Transfers of net assets arising from

administrative restructurings are treated as

distributions to or contributions by owners.

Transfers of net liabilities arising from

administrative restructurings are treated as

distribution to owners.

(O) Commitments

Commitments for future expenditure

include operating and capital commitments

arising from contracts. These commitments

are disclosed by way of a note (refer to

Note 17 Commitments for expenditure)

at their nominal value and inclusive of

the GST payable. In addition, where it

is considered appropriate and provides

additional relevant information to users, the

net present values of signiﬁcant individual

commitments are referenced in the notes.

These future expenditures cease to be

disclosed as commitments once the

related liabilities are recognised in the

balance sheet.

(P) Contingent assets and contingent

liabilities

Contingent assets and contingent liabilities

are not recognised in the balance sheet,

but are disclosed by way of a note (refer to

Note 18 Contingent assets and contingent

liabilities) and, if quantiﬁable, are measured

at nominal value. Contingent assets and

liabilities are presented inclusive of GST

receivable or payable respectively.

(Q) Accounting for the goods and

services tax (GST)

Income, expenses and assets are

recognised net of the amount of associated

GST, except where GST incurred is not

recoverable from the taxation authority. In

this case, the GST payable is recognised

as part of the cost of acquisition of the

asset or as part of the expense.

Receivables and payables are stated

inclusive of the amount of GST receivable

or payable. The net amount of GST

recoverable from, or payable to, the

taxation authority is included with other

receivables or payables in the balance

sheet.

Cash ﬂows are presented on a gross

basis. The GST components of cash ﬂows

arising from investing or ﬁnancing activities

which are recoverable from, or payable

to the taxation authority, are presented as

operating cash ﬂow.

Commitments and contingent assets and

liabilities are also stated inclusive of GST

(refer to Note 1(O) and Note 1(P)).

(R) Events after reporting period

Assets, liabilities, income or expenses

arise from past transactions or other

past events. Where the transactions

result from an agreement between MFB

and other parties, the transactions are

only recognised when the agreement is

irrevocable at or before the end of the

reporting period. Adjustments are made

to amounts recognised in the ﬁnancial

statements for events which occur after

the reporting period and before the date

the ﬁnancial statements are authorised

for issue, where those events provide

information about conditions which existed

in the reporting period. Note disclosure

is made about events between the

reporting period and the date the ﬁnancial

statements are authorised for issue where

the events relate to conditions which arose

after the end of the reporting period that

are considered to be of material interest.

MFB Annual Report 2013–14 59

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

(S) Australian accounting standards issued that are not yet effective (AASs)

Certain new AASs have been published that are not mandatory for the 30 June 2014 reporting

period. The Department of Treasury and Finance assesses the impact of these new standards

and advises MFB of their applicability and early adoption where applicable. As at 30 June

2014, the following AASs have been issued by the AASB but not yet effective. They become

effective for the ﬁrst ﬁnancial statements for reporting periods commencing after the stated

operative dates as follows:

Standard/

Interpretation

Summary Applicable

for reporting

periods

beginning on

Impact on MFB ﬁnancial

statements

AASB 9 Financial

instruments

This Standard simpliﬁes

requirements for the classiﬁcation

and measurement of ﬁnancial

assets resulting from Phase 1

of the IASB’s project to replace

IAS 39 Financial Instruments:

Recognition and Measurement

(AASB 139 Financial Instruments:

Recognition and Measurement).

1 Jan 2017 The preliminary assessment

has identiﬁed that the

ﬁnancial impact of available

for sale (AFS) assets will

now be reported through

other comprehensive

income (OCI) and no longer

recycled to the proﬁt and

loss.

While the preliminary

assessment has not

identiﬁed any material

impact arising from AASB

9, it will continue to be

monitored and assessed.

AASB 10

Consolidated

Financial

Statements

This Standard forms the basis for

determining which entities should

be consolidated into an entity’s

ﬁnancial statements. AASB 10

deﬁnes ‘control’ as requiring

exposure or rights to variable

returns and the ability to affect

those returns through power over

an investee, which may broaden

the concept of control for public

sector entities.

The AASB has issued an

Australian Implementation

Guidance for Not-for-Proﬁt

Entities – Control and Structured

Entities that explains and

illustrates how the principles

in the Standard apply from the

perspective of not-for-proﬁt

entities in the private and public

sectors.

1 Jan 2014

(not-for-proﬁt

entities)

For MFB, AASB 10 builds

on the control guidance

that existed in AASB 127

and Interpretation 112 and

is not expected to change

which entities need to be

consolidated.

Ongoing work is being done

to monitor and assess the

impact of this standard.

AASB 11 Joint

Arrangements

This Standard deals with the

concept of joint control, and

sets out a new principles-based

approach for determining the

type of joint arrangement that

exists and the corresponding

accounting treatment. The new

categories of joint arrangements

under AASB 11 are more

aligned to the actual rights and

obligations of the parties to the

arrangement.

1 Jan 2014

(not-for-proﬁt

entities)

Based on current

assessment, entities already

apply the equity method

when accounting for joint

ventures. It is anticipated

that there would be no

material impact.

Ongoing work is being done

to monitor and assess the

impact of this standard.

60 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Standard/

Interpretation

Summary Applicable

for reporting

periods

beginning on

Impact on MFB ﬁnancial

statements

AASB 12

Disclosure of

Interests in Other

Entities

This Standard requires disclosure

of information that enables

users of ﬁnancial statements

to evaluate the nature of,

and risks associated with,

interests in other entities and

the effects of those interests on

the ﬁnancial statements. This

Standard replaces the disclosure

requirements of AASB 127

Separate Financial Statements

and AASB 131 Interests in Joint

Ventures.

1 Jan 2014

(not-for-proﬁt

entities)

The new standard is

likely to require additional

disclosures and ongoing

work is being done to

determine the extent

of additional disclosure

required.

AASB 127

Separate Financial

Statements

This revised Standard prescribes

the accounting and disclosure

requirements for investments

in subsidiaries, joint ventures

and associates when an entity

prepares separate ﬁnancial

statements.

1 Jan 2014

(not-for-proﬁt

entities)

Current assessment

indicates that there is limited

impact on MFB. Ongoing

work is being done to

monitor and assess the

impact of this standard.

AASB 128

Investments in

Associates and

Joint Ventures

This revised Standard sets

out the requirements for the

application of the equity method

when accounting for investments

in associates and joint ventures.

1 Jan 2014

(not-for-proﬁt

entities)

Current assessment

indicates that there is limited

impact on MFB. Ongoing

work is being done to

monitor and assess the

impact of this standard.

AASB 1055

Budgetary

Reporting

AASB 1055 extends the scope

of budgetary reporting that is

currently applicable for the whole

of government and general

government sector (GGS) to

NFP entities within the GGS,

provided that these entities

present separate budget to the

parliament.

1 July 2014 MFB will be required to

restate in the ﬁnancial

statements the budgetary

information in accordance

with the presentation format

prescribed in Australian

Accounting Standards

and explain the signiﬁcant

variances from the original

budget.

MFB Annual Report 2013–14 61

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

62 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

$000 $000

2. INCOME FROM TRANSACTIONS

(a) Grants

Department of Justice – Grants 317,093 –

Treasurer’s advance (i) 12,602 –

Total contributions 329,695 –

(b) Contributions

Insurance companies – 227,033

Municipalities – 37,839

Department of Justice – Contributions – 37,839

Brokers and owners (ii) 1,739 5,399

Commonwealth Government – 1,138

Total contributions 1,739 309,248

False alarm charges 6,509 5,669

Fire suppression equipment sales and servicing 18,400 16,869

Other sales 7,132 7,184

Total sales of goods and services 32,041 29,722

(d) Other Income

Interest

Interest on bank deposits 487 571

Interest – held to maturity investments 1,362 2,952

Interest – held for trading investments 3,046 3,603

Total interest 4,895 7,126

Dividends

Dividends – held for trading investments 2,095 1,662

Total dividends 2,095 1,662

Income – sundry

Workers’ compensation recovered 2,978 1,996

Property rental 506 472

Contribution penalties 8 830

Other 1,515 1,679

Total income – sundry 5,007 4,977

Total other income 11,997 13,765

Total income from transactions 375,472 352,735

(i) The Treasurer’s Advance received via

the Department of Justice is the State

Government’s reimbursement of costs

incurred in assisting regional ﬁre strike

teams including the Hazelwood coal

seam ﬁre.

(ii) The Brokers and Owners contributions

in 2014 are the residual contributions

pertaining to the 2012/13 ﬁnancial

year. Subsequent to the Fire Services

Levy introduced 1 July 2013, there

will be no further brokers and owners

contributions in future ﬁnancial years.

MFB Annual Report 2013–14 63

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

$000 $000

3. EXPENSES FROM TRANSACTIONS

(a) Employee expenses

Salaries (i) 199,562 191,512

Overtime (i) 18,952 15,167

Movement in employee beneﬁt provisions

(excluding impact of present value discount rate changes) 5,632 6,124

Superannuation – deﬁned beneﬁt fund 16,463 15,925

Superannuation – deﬁned contribution fund 1,174 1,223

Payroll tax 11,582 10,977

Workers’ compensation 9,600 9,099

Fringe beneﬁts tax 1,062 1,158

Total employee expenses 264,027 251,185

(b) Depreciation and amortisation

Buildings 10,114 7,918

Plant and equipment 11,057 11,211

Amortisation of intangible assets 1,300 1,060

Total depreciation and amortisation 22,471 20,189

Contract services – other (ii) 18,938 15,931

Contract services – government 18,921 18,304

Property utilities, rates and maintenance 11,170 7,465

Supplies and consumables 3,610 4,318

Motor vehicle maintenance and fuel 4,545 4,020

Plant and equipment maintenance 4,730 5,369

Information technology 3,426 3,811

Uniforms 3,658 3,824

Travel 2,725 2,930

Training and development 3,011 3,384

Communications 1,750 1,895

Legal 4,313 3,957

Insurance 1,013 1,054

Advertising and promotion 81 122

Internal audit and compliance audits 328 381

Consultants 874 303

Property lease 1,237 1,024

Cost of goods sold 487 536

Other 2,085 1,898

Total other operating expenses 86,902 80,526

Total expenses from transactions 373,400 352,716

(i) Salaries and overtime in 2013–14

incorporate $6.7 million additional

overtime incurred as part of the

MFB response to the Hazelwood

coal seam ﬁre and regional ﬁres

outside of the metropolitan district.

(ii) Contract services – other costs

include the signiﬁcant unplanned

expenditure (approximately $4.7

million on asbestos control,

removal and remediation at

the Eastern Hill and Thornbury

locations).

64 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

$000 $000

4. OTHER ECONOMIC FLOWS INCLUDED

IN NET RESULT

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

Impairment of property (365) (355)

Amortisation of non-produced intangible assets (i) (899) (816)

Net gain/(loss) on disposal of property, plant and equipment 825 (251)

Total net (loss) on non-ﬁnancial assets (439) (1,422)

(b) Net gain/(loss) on ﬁnancial instruments

Net (loss)/gain on disposal of ﬁnancial investments 10 (382)

Net (loss) arising from revaluation of ﬁnancial assets at fair value

– market risk (ii) (413) (232)

Net (increase)/decrease in receivables doubtful debt provision 216 (416)

Total net (loss) on ﬁnancial instruments (187) (1,030)

Net gain/(loss) arising from revaluation of leave liabilities 601 2,620

Total other gains/(losses) from other economic ﬂows 601 2,620

Total other economic ﬂows included in net result (25) 168

2014 2013

$000 $000

5. RECEIVABLES

Current receivables

Contractual:

Sales of goods and services 3,608 3,786

Other receivables 82 414

3,690 4,200

Statutory:

Sales of goods and services 2,662 4,490

GST Input tax credit recoverable 1,196 1,856

Provision for doubtful statutory receivables (402) (761)

3,456 5,585

Total 7,146 9,785

(i) MFB allows 14 day credit terms on contribution receivables and 30 day credit terms on other

receivables and actively pursues accounts that fall past due. Interest is charged on overdue

contribution receivables in accordance with the Metropolitan Fire Brigades Act 1958 and

interest is not charged on overdue other receivables.

(ii) MFB has allowed for doubtful receivables based on a detailed review of outstanding accounts

and their estimated recoverable amounts.

(i) This is amortisation of non-produced

intangible assets with ﬁnite useful

lives.

(ii) For ﬁnancial asset and liabilities that

are held for trading or designated at

fair value through proﬁt or loss, the

net gain or loss is calculated by taking

the movement for the period in the fair

value of the ﬁnancial asset or liability.

MFB Annual Report 2013–14 65

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

$000 $000

Movement in the provision for doubtful statutory

ﬁnancial assets

Balance at beginning of the year 761 444

Amounts written off during the year (144) (99)

Amounts recovered during the year 4 –

(Decrease)/Increase in allowance recognised in the net result (216) 416

Balance at the end of the year 405 761

Debtors in liquidation or in receivership are fully provided as doubtful debts as future receipts are

deemed unlikely.

In determining the recoverability of a trade receivable MFB considers any change in the credit

quality of the receivable from the date credit was initially granted up to the reporting date.

During the ﬁnancial year, receivables deemed uncollectable and written-off totalled $144,000

(2013: $99,000).

Note 12 Financial Instruments outlines the nature and extent of risk arising from contractual

receivables.

5. RECEIVABLES (continued)

Ageing analysis of contractual ﬁnancial assets

Carrying Not past due Past due but not impaired

amount and not Less than 1 – 3 3 months

impaired 1 month months – 1 year

$000 $000 $000 $000 $000

2014

Receivables (i) 3,690 3,056 475 72 87

Total 3,690 3,056 475 72 87

2013

Receivables (i) 4,200 2,476 600 603 521

Total 4,200 2,476 600 603 521

2014 2013

$000 $000

6. INVENTORIES

Current – inventories

Supplies, parts and security spares at cost 1,145 1,314

Less: allowance for obsolescence (266) (307)

Total 879 1,007

(i) The carrying amounts disclosed

here exclude statutory amounts

(e.g. statutory sales of goods and

services receivable).

66 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

$000 $000

7. NON-FINANCIAL ASSETS CLASSIFIED

AS HELD FOR SALE

Current assets

Freehold land held for sale (i) 3,284 3,180

Total physical assets classiﬁed as held for sale 3,284 3,180

Fair value measurement of non-ﬁnancial physical assets held for sale

The following table provides the fair value measurement hierarchy of MFB non-ﬁnancial physical

assets held for sale:

Carrying Fair value measurement at end of

amount as at reporting period using:

30 June 2014 Level 1 (ii) Level 2 (ii) Level 3 (ii)

$000 $000 $000 $000

Freehold land held for sale 3,284 – 3,284 –

Freehold buildings held for sale – – – –

Total 3,284 – 3,284 –

Freehold land held for sale is carried at fair value less costs of disposal.

2014 2013

$000 $000

8. OTHER NON-FINANCIAL ASSETS

Current other assets

Prepayments 4,111 1,709

(i) MFB intends to dispose of freehold

land and buildings and has a

deﬁnite plan to dispose in the next

ﬁnancial year.

(ii) Classiﬁed in accordance with the

fair value hierarchy, using valuations

performed in December 2013 by

Charter Keck Cramer (Valuer-

General Victoria appointed valuer)

see Note 1 (B).

MFB Annual Report 2013–14 67

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

$000 $000

9. PROPERTY, PLANT AND EQUIPMENT

Public Safety and Environment Purpose Group

Freehold land

At fair value – management valuation 181,448 193,752

Total land 181,448 193,752

Buildings

At fair value – management valuation 280,482 194,936

Less: accumulated depreciation (9,918) –

Total buildings 270,564 194,936

Total land and buildings 452,012 388,688

Plant and equipment

At fair value – management valuation 123,100 113,442

Less: accumulated depreciation (57,453) (47,903)

Total plant and equipment 65,647 65,539

Assets under construction at cost

Buildings 4,627 43,375

Plant and equipment 7,648 9,974

Total assets under construction at cost 12,275 53,349

Total property, plant and equipment 529,934 507,576

Public safety and environment purpose group

Property, plant and equipment are classiﬁed primarily by the purpose for which the assets are

used according to one of six purpose groups based upon government purpose classiﬁcations.

All assets within a purpose group are further sub-categorised according to the asset’s nature

(freehold land, buildings, plant and equipment) with each sub-category being classiﬁed as a

separate class of asset for ﬁnancial reporting purposes.

The Department of Treasury and Finance has determined a ﬁve-year revaluation cycle whereby

assets in a Purpose Group are revalued within the relevant year over the life of the cycle, with the

Public Safety and Environment Purpose Group revaluation performed as at 30 June 2011. The

revaluations of land and buildings were undertaken by Valuer-General Victoria who appointed

M Cleary, Certiﬁed Practising Valuer, Australian Property Institute, Member No 62839, of Urbis

Valuations Pty Ltd to perform the independent valuation with an effective date of 30 June 2011.

Fair value assessments of property, plant and equipment were performed by management as at

30 June 2014. Building valuations determined by management using the depreciated replacement

cost method resolved no material change in fair value as at 30 June 2014 and revaluation was

not required.

Vehicles are valued using the depreciated replacement cost method. MFB acquires new vehicles

and disposes these vehicles at the end of their economic life. The process of acquisition, use

and disposal in the market is managed by experienced ﬂeet managers in MFB who set relevant

depreciation rates during use to reﬂect the utilisation of the vehicles. Appliance vehicles have a

15 year life.

Plant and equipment is held at fair value. When plant and equipment is specialised in use, such

that it is rarely sold other than as part of a going concern, fair value is determined using the

depreciated replacement cost method.

There were no changes in valuation techniques throughout the period to 30 June 2014.

For all assets measured at fair value, the current use is considered the highest and best use.

There was no material difference in land or plant and equipment fair values, subsequently these

asset classes were not revalued as at 30 June 2014.

68 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

9. PROPERTY, PLANT AND EQUIPMENT (continued)

Reconciliations

Reconciliations of the carrying amounts of property, plant and equipment at the beginning and end

of the ﬁnancial year are set out below:

Freehold Buildings Plant and Construction Total

land equipment work in

progress

$000 $000 $000 $000 $000

2014

Opening balance 193,752 194,936 65,539 53,349 507,576

Additions – 44,635 3,766 8,498 56,899

Disposals – – (627) – (627)

Net revaluations increment – – – – –

Impairment (365) – – – (365)

Transfers from construction

work in progress – 41,546 8,026 (49,572) –

Transfers to non-ﬁnancial

assets held for sale (3,284) – – – (3,284)

Transfers to investment

property (8,655) (439) – – (9,094)

Depreciation expense – (10,114) (11,057) – (21,171)

Closing balance 181,448 270,564 65,647 12,275 529,934

Freehold Buildings Plant and Construction Total

land equipment work in

progress

$000 $000 $000 $000 $000

2013

Opening balance 195,382 177,523 68,147 19,517 460,569

Additions 1,805 4,473 6,836 37,810 50,924

Disposals – – (1,079) – (1,079)

Net revaluations increment – 19,826 – – 19,826

Impairment (255) (100) – – (355)

Transfers from construction

work in progress – 1,132 2,846 (3,978) –

Transfers to non-ﬁnancial

assets held for sale (3,180) – – – (3,180)

Depreciation expense – (7,918) (11,211) – (19,129)

Closing balance 193,752 194,936 65,539 53,349 507,576

In accordance with AASB 1049 Whole of Government and General Government Sector Financial

Reporting, all non-current physical assets are valued using the revaluation model.

Impairment of property, plant and equipment

An impairment loss of $365,000 recorded for the reporting period relating to land and buildings

transferred to non-ﬁnancial assets held for sale to adjust the property values to reﬂect a book value

representing lower of book to market appraised value less costs to sell, as at 30 June 2014.

MFB Annual Report 2013–14 69

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

9. PROPERTY, PLANT AND EQUIPMENT (continued)

Restricted assets

MFB holds $15,541,575 (written down book value 30 June 2014) worth of property listed as

heritage assets which is the old Eastern Hill ﬁre station and the heritage recognised Eastern Hill

administration building and station. This heritage asset cannot be modiﬁed or disposed of without

formal ministerial approval.

Fair value measurement hierarchy for property, plant and equipment assets as at

30 June 2014

Carrying Fair value measurement at end of

amount as at reporting period using:

30 June 2014 Level 1 (i) Level 2 (i) Level 3 (ii)

$000 $000 $000 $000

Land at fair value 181,448 – 181,448 –

Buildings at fair value 270,564 – – 270,564

Plant, equipment & vehicles at fair value (ii) 65,647 – – 65,647

Total 517,659 – 181,448 336,211

Fair value measurement hierarchy for property, plant and equipment assets as at

30 June 2013

Carrying Fair value measurement at end of

amount as at reporting period using:

30 June 2013 Level 1 (i) Level 2 (i) Level 3 (ii)

$000 $000 $000 $000

Land at fair value 193,752 – 193,752 –

Buildings at fair value 194,936 – – 194,936

Plant, equipment & vehicles at fair value (ii) 65,539 – – 65,539

Total 454,227 – 193,752 260,475

Specialised Specialised Heritage Vehicles Plant and

land buildings asset equipment

$000 $000 $000 $000 $000

Reconciliation of

Level 3 fair value

2014

Opening balance – 178,143 16,793 55,660 9,879

Purchases (sales) – 86,181 – 10,881 911

Transfers in (out) of Level 3 – (439) – (586) (41)

Gains or losses recognised

in net result

Depreciations – (8,862) (1,252) (8,002) (3,055)

Impairment loss – – – – –

Subtotal – 255,023 15,541 57,953 7,694

Gains or losses recognised

in other economic ﬂows –

other comprehensive income

Revaluation – – – – –

Subtotal – – – – –

Closing balance – 255,023 15,541 57,953 7,694

Unrealised gains/(losses)

on non-ﬁnancial assets – – – – –

(i) Classiﬁed in accordance with the

fair value hierarchy, see Note 1 (B).

(ii) Emergency vehicles are categorized

as level 3 as the values are

calculated using the depreciated

replacement cost method.

70 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

9. PROPERTY, PLANT AND EQUIPMENT (continued)

Specialised land and specialised buildings

The market approach is also used for specialised land, although is adjusted for the community

service obligations (CSO) to reﬂect the specialised nature of the land being valued.

The CSO adjustment is a reﬂection of the valuer’s assessment of the impact of restrictions

associated with an asset to the extent that is also equally applicable to market participants. This

approach is in light of the highest and best use consideration required for fair value measurement

and takes into account the use of the asset that is physically possible, legally permissible and

ﬁnancially feasible. As adjustments of CSO are considered as signiﬁcant unobservable inputs,

specialised land would be classiﬁed as Level 3 assets.

For MFB’s majority of specialised buildings, the depreciated replacement cost method is used,

adjusting for the associated depreciations. As depreciation adjustments are considered as

signiﬁcant, unobservable inputs in nature, specialised buildings are classiﬁed as Level 3 fair value

measurements.

An independent valuation of MFB’s specialised land and specialised buildings was performed by

Urbis Valuations Pty Ltd, a VGV appointed valuer. The valuation was performed using the market

approach adjusted for CSO. The effective date of the valuation is 30 June 2011.

Specialised Specialised Heritage Vehicles Plant and

land buildings asset equipment

$000 $000 $000 $000 $000

Reconciliation of

Level 3 fair value

2013

Opening balance – 159,478 18,045 60,135 8,012

Purchases (sales) – 5,605 – 4,695 4,987

Transfers in (out) of Level 3 – – – (1,069) (10)

Gains or losses recognised

in net result

Depreciations – (6,666) (1,252) (8,101) (3,110)

Impairment loss – (100) – – –

Subtotal – 158,317 16,793 55,660 9,879

Gains or losses recognised

in other economic ﬂows –

other comprehensive income

Revaluation – 19,826 – – –

Subtotal – 19,826 – – –

Closing balance – 178,143 16,793 55,660 9,879

Unrealised gains/(losses)

on non-ﬁnancial assets – – – – –

MFB Annual Report 2013–14 71

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

9. PROPERTY, PLANT AND EQUIPMENT (continued)

Description of signiﬁcant unobservable inputs to level 3 valuations

Valuation

technique

Signiﬁcant

unobservable

inputs

Range

(weighted

average)

Sensitivity of fair value

measurement to changes in

signiﬁcant unobservable inputs

Specialised

land

Market

approach

[adjusted for

CSO impact]

Community

Service

Obligation

(CSO)

adjustment.

Indeﬁnite life

20% discount

for CSO (i)

A signiﬁcant increase or decrease in

the CSO adjustment would result in a

signiﬁcantly lower (higher) fair value.

Specialised

buildings

Depreciated

replacement

cost

Cost

consultant’s

replacement

cost per No.

Bays stations.

Useful life of

specialised

buildings.

20 years

A signiﬁcant increase or decrease in

the replacement cost would result in a

signiﬁcantly higher or lower fair value.

A signiﬁcant increase or decrease in

the estimated useful life of the asset

would result in a signiﬁcantly higher or

lower valuation.

Heritage

asset

Depreciated

replacement

cost

VGV appointed

valuation of

site.

Useful life of

heritage asset.

40 years

A signiﬁcant increase or decrease

in the independent valuation would

result in a signiﬁcantly higher or lower

fair value.

A signiﬁcant increase or decrease in

the estimated useful life of the asset

would result in a signiﬁcantly higher or

lower valuation.

Vehicles/

emergency

appliances

Depreciated

replacement

cost

Replacement

value by

appliance type.

Useful life of

vehicles.

15 years

A signiﬁcant increase or decrease in

replacement value would result in a

signiﬁcantly higher or lower fair value.

A signiﬁcant increase or decrease in

the estimated useful life of the asset

would result in a signiﬁcantly higher or

lower valuation.

Plant and

equipment

Depreciated

replacement

cost

Management

determination

of current

replacement

values.

Useful life

of plant and

equipment.

3–15 years

A signiﬁcant increase or decrease

in management determined current

replacement values would result in a

signiﬁcantly higher or lower fair value.

A signiﬁcant increase or decrease in

the estimated useful life of the asset

would result in a signiﬁcantly higher or

lower valuation.

(i) CSO adjustments of 20 per

cent were applied to reduce

the market approach value for

MFB’s specialised land.

72 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

$000 $000

10. INVESTMENT PROPERTY

Balance at beginning of ﬁnancial year – –

Additions from subsequent expenditure – –

Disposals and property held for sale – –

Net gain/loss from fair value adjustments – –

Transfers to investment property 9,094 –

Balance at end of ﬁnancial year 9,094 –

10.1 Fair value hierarchy

Carrying Fair value measurement at end of

amount as at reporting period using:

30 June 2014 Level 1 (i) Level 2 (i) Level 3 (i)

$000 $000 $000 $000

Investment property 9,094 9,094 – –

There have been no transfers between levels during the period. There were no changes in

valuation techniques throughout the period to 30 June 2014.

For investment properties measured at fair value, the current use of the asset is considered the

highest and best use.

The fair value of MFB investment properties at 30 June 2014 have been arrived at on the

basis of an independent valuation carried out by independent valuers, Urbis Valuations Pty Ltd

performed in June 2011 and the values remain materially the same. The valuation was determined

by reference to market evidence of transaction prices for similar properties with no signiﬁcant

unobservable adjustments, in the same location and condition and subject to similar lease and

other contracts.

(i) Classiﬁed in accordance with

the fair value hierarchy.

MFB Annual Report 2013–14 73

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

$000 $000

11. INTANGIBLE ASSETS

Intangible assets

Licence agreements at cost 13,243 12,940

Intellectual property – system research 560 560

Less: accumulated amortisation (6,934) (5,848)

Total licence agreements 6,869 7,652

Software at cost 17,452 16,333

Less: accumulated amortisation (13,896) (12,835)

Total software 3,556 3,498

Total intangible assets 10,425 11,150

Intangible assets referred to above relate to software and licence agreements providing MFB with

access to optic ﬁbre communication networks.

Intangible assets are amortised on a straight line basis over the asset life.

Reconciliations

Reconciliations of the carrying amounts of licence agreements and software at the beginning and

end of the ﬁnancial year are set out below:

Licence Intellectual Software Total

agreements property

$000 $000 $000 $000

2014

Carrying amount at start of year 7,154 498 3,498 11,150

Additions 303 – 1,266 1,569

Disposals – – (95) (95)

Amortisation expense – (187) (1,113) (1,300)

Other economic ﬂows expense (899) – – (899)

Carrying amount at end of year 6,558 311 3,556 10,425

2013

Carrying amount at start of year 7,222 – 2,756 9,978

Additions 748 560 1,740 3,048

Disposals – – – –

Amortisation expense – (62) (998) (1,060)

Other economic ﬂows expense (816) – – (816)

Carrying amount at end of year 7,154 498 3,498 11,150

74 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

12. FINANCIAL INSTRUMENTS

Financial risk management objectives

and policies

MFB’s principal ﬁnancial instruments comprise:

• cash assets

• term deposits

• receivables (excluding statutory receivables)

• investments in equities and managed

investment schemes

• debt securities

• payables (excluding statutory payables).

MFB has appropriate policies and processes

to manage ﬁnancial risks associated with

ﬁnancial instruments and the policies are

in accordance with the Borrowing and

Investment Powers Act 1987 and within

government policy parameters and guidelines

in relation to ﬁnancial asset investment and

management. Financial investment strategies

are regularly reviewed by the Board in

conjunction with VFMC to minimise ﬁnancial

risks and ensure appropriate diversiﬁcation of

investment products across various entities

and to ensure earnings and capital growth are

maximised and balanced with consideration of

associated risks.

Cash and cash deposits and held to maturity

investments represent funding provided to

MFB for operations and for speciﬁc capital

works and projects which will be expended in

future years.

The Board established the fair value through

proﬁt and loss – held for trading investments to

primarily fund its employee beneﬁt provisions

liability and future capital works programs.

Debt security investments in the held for

trading asset present a risk of capital loss.

In consideration of this, the VFMC and the

investment manager moderate this risk

through careful selection of securities within

speciﬁed limits approved by the Board.

The maximum capital loss is the fair value

of the ﬁnancial instruments. The held for

trading investments are primarily in equity

and security instruments issued by ASX200

(Australian Stock Exchange) listed companies,

as well as investments in equity instruments

issued by international listed companies. The

investments are in unlisted unit trusts managed

by or through VFMC. A signiﬁcant portion of

this investment class is term and ﬁxed interest

deposits with TCV.

The VFMC held for trading investment fair

value has increased from $109,275,000 as at

30 June 2013 to $114,014,000 as at 30 June

2014, this increase reﬂects the reinvestment

of dividends and interest earnings during the

reporting period and the net gain or (loss)

on ﬁnancial instruments reported as other

economic ﬂows.

The Board regularly reviews the performance,

earnings and the asset allocation of the VFMC

investments and annually reviews the portfolio

and considers the investment asset allocation.

Cash balances and held to maturity

investments are invested according to

the Department of Treasury and Finance

guidelines. As at reporting date, term

deposits are invested solely with TCV (AAA

rated) and cash balances are with Westpac

Banking Corporation, an AA rated institution

in accordance with State Treasury Risk

Management guidelines.

Receivables have established credit terms and

collection processes are applied. Additionally

receivables are regularly reviewed for

collectability and impairment and appropriate

adjustments are made to an allowance

account or the receivable is written off if

collectability is unlikely.

MFB prepares cash ﬂow forecasts and

manages cash ﬂows to ensure its ability to

meet all liability obligations as they fall due.

MFB Annual Report 2013–14 75

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

12. FINANCIAL INSTRUMENTS (continued)

Contractual Contractual Contractual Contractual Total

ﬁnancial ﬁnancial ﬁnancial ﬁnancial

assets/ assets/ assets – liabilities at

liabilities liabilities loans and amortised

designated held-for- receivables cost

at fair value trading at

through fair value

proﬁt/loss through

proﬁt/loss

$000 $000 $000 $000 $000

Categorisation of

ﬁnancial instruments

2014

Contractual ﬁnancial assets

Cash and deposits 14,235 15,000 – – 29,235

Receivables (i) – – 3,690 – 3,690

Investments and other

contractual ﬁnancial assets:

Held to maturity term

deposit investments (TCV) – – – – –

Held for trading investments

Short term money market (TCV) 96,648 – – – 96,648

Infrastructure – unlisted trust 2,062 – – – 2,062

Property – unlisted trust 333 – – – 333

Balanced fund 14,971 – – – 14,971

Total contractual

ﬁnancial assets 128,249 15,000 3,690 – 146,939

Contractual ﬁnancial liabilities

Payables – amortised cost (i) – – – 17,536 17,536

Total contractual

ﬁnancial liabilities – – – 17,536 17,536

2013

Contractual ﬁnancial assets

Cash and deposits 9,431 – – – 9,431

Receivables (i) – – 4,200 – 4,200

Investments and other

contractual ﬁnancial assets:

Held to maturity term

deposit investments (TCV) – 50,000 – – 50,000

Held for trading investments

Short term money market (TCV) 93,588 – – – 93,588

Infrastructure – unlisted trust 2,063 – – – 2,063

Property – unlisted trust 1,534 – – – 1,534

Balanced fund 12,090 – – – 12,090

Total contractual

ﬁnancial assets 118,706 50,000 4,200 – 172,906

Contractual ﬁnancial liabilities

Payables – amortised cost (i) – – – 19,182 19,182

Total contractual

ﬁnancial liabilities – – – 19,182 19,182

(i) The total amounts disclosed here

exclude statutory amounts (eg

amounts owing from the Victorian

government and GST input tax credit

recoverable and taxes payable).

76 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

12. FINANCIAL INSTRUMENTS (continued)

The fair values and net fair values of ﬁnancial instrument assets and liabilities are determined as follows:

• Level 1 – the fair value of ﬁnancial instrument with standard terms and conditions and traded in

active liquid markets are determined with reference to quoted market prices;

• Level 2 – the fair value is determined using inputs other than quoted prices that are observable

for the ﬁnancial asset or liability, either directly or indirectly; and

• Level 3 – the fair value is determined in accordance with generally accepted pricing models

based on discounted cash ﬂow analysis using unobservable market inputs.

MFB considers that the carrying amount of ﬁnancial instrument assets and liabilities recorded in

the ﬁnancial statements to be a fair approximation of their fair values, because of the short-term

nature of the ﬁnancial instruments and the expectation that they will be paid in full.

Cash reserves, term investments and held for trading investments are held to fund employee

beneﬁt provisions liability and speciﬁc capital projects and initiatives including Marine Response.

The following table presents MFB’s ﬁnancial assets and liabilities at fair value as at 30 June 2014:

Carrying Fair value measurement at end of

amount as at reporting period using:

30 June 2014 Level 1 Level 2 Level 3

$000 $000 $000 $000

Financial assets measured

at fair value

2014

Fair value through

proﬁt/loss investments 114,014 91,604 22,081 329

Held to maturity term

deposit investments – – – –

Total 114,014 91,604 22,081 329

Carrying Fair value measurement at end of

amount as at reporting period using:

30 June 2013 Level 1 Level 2 Level 3

$000 $000 $000 $000

Financial assets measured

at fair value

2013

Fair value through

proﬁt/loss investments 109,275 93,588 14,153 1,534

Held to maturity term

deposit investments 50,000 50,000 – –

Total 159,275 143,588 14,153 1,534

Financial assets at fair value Total Total

through proﬁt/loss

Managed investment schemes

$000 $000 $000 $000

2014 2013 2014 2013

Reconciliation of Level 3

fair value movements

Opening balance 1,534 3,749 1,534 3,749

Total gains or losses recognised in:

Net result (1,205) (2,215) (1,205) (2,215)

Closing balance 329 1,534 329 1,534

Total gains or losses for the period

included in proﬁt or loss for assets

held at the end of the period – – – –

MFB Annual Report 2013–14 77

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

12. FINANCIAL INSTRUMENTS (continued)

12.1 Net holding gain/(loss) on ﬁnancial instruments by category

Net Total Fee Impairment Total

holding interest income/ loss

gain/(loss) income/ (expense)

(expense)

$000 $000 $000 $000 $000

2014

Contractual ﬁnancial assets

Financial assets designated at

fair value through proﬁt/loss 4,738 3,046 (119) – 7,665

Financial assets – loans and receivables – 1,362 – – 1,362

Total contractual ﬁnancial assets 4,738 4,408 (119) – 9,027

Net Total Fee Impairment Total

holding interest income/ loss

gain/(loss) income/ (expense)

(expense)

$000 $000 $000 $000 $000

2013

Contractual ﬁnancial assets

Financial assets designated at

fair value through proﬁt/loss 4,652 3,603 (120) – 8,135

Financial assets – loans and receivables – 2,952 – – 2,952

Total contractual ﬁnancial assets 4,652 6,555 (120) – 11,087

The net holding gain/(loss) on ﬁnancial instruments is calculated by comparing the book value of

ﬁnancial assets held to the fair market value of assets held at the end of the period.

12.2 Interest rate risk

Interest rate risk relates to ﬂuctuations in fair values or future cash ﬂows of ﬁnancial instruments

due to changes in market interest rates.

12.2(i) Held for trading ﬁnancial investment assets

The majority of the held for trading ﬁnancial investment assets at balance date are interest

bearing, short term investments with Treasury Corporation Victoria (TCV) consequently

MFB is subject to signiﬁcant amounts of risk due to ﬂuctuations in the prevailing levels of

market interest rates. The interest rate risk exposure at balance date is included in the

sensitivity analysis (refer to Note 12.2(iii)) below.

The Board in conjunction with the VFMC considers interest rate risk when reviewing the

investment strategy.

12.2(ii) Cash and cash deposits and held to maturity receivables ﬁnancial assets

MFB is exposed to interest rate risk from its cash ﬂow investments through bills of

exchange, bank and money market term deposits. Short term money market deposits are

invested for varying terms to meet cash ﬂow requirements and are not hedged.

MFB’s exposure to interest rates on these ﬁnancial assets is detailed in the interest rate

sensitivity analysis below (refer to Note 12.2(iii)).

12.2(iii) Interest rate sensitivity

The following interest rate sensitivity analysis has been based on the exposure to interest

rates for the above asset classes at reporting date and the change occurring at that time.

A 50 basis point change represents management’s assessment of a reasonably possible

change based upon assessment of ofﬁcial interest rate changes over the past ﬁve years

and considering published forecasts.

At reporting date if interest rates increased by 50 basis points and all other variables were

constant, the impact would be increased interest income of $629,000 (2013: $765,000)

and an increase by the same amount to equity. Conversely if interest rates decreased by

50 basis points interest income would reduce by ($629,000) (2013: ($765,000) and equity

would reduce by the same amount.

78 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

12. FINANCIAL INSTRUMENTS (continued)

MFB’s exposure to interest rate risks and the effective interest rates for ﬁnancial assets and

liabilities at balance date are:

Weighted Carrying Fixed Variable Non-

average amount interest interest interest

interest rate rate bearing

rate

% $000 $000 $000 $000

Interest rate exposure

of ﬁnancial instruments

2014

Financial assets

Cash and deposits 2.53 29,235 15,000 14,235 –

Term deposit investments – – – –

Receivables 3,690 – – 3,690

Investment ﬁnancial assets 2.77 114,014 96,648 – 17,366

Total 146,939 111,648 14,235 21,056

Financial liabilities

Payables 17,536 – – 17,536

Total 17,536 – – 17,536

Weighted Carrying Fixed Variable Non-

average amount interest interest interest

interest rate rate bearing

rate

% $000 $000 $000 $000

Interest rate exposure

of ﬁnancial instruments

2013

Financial assets

Cash and deposits 3.16 9,431 – 9,431 –

Term deposit investments 3.37 50,000 50,000 – –

Receivables 4,200 – – 4,200

Investment ﬁnancial assets 3.37 109,275 93,588 – 15,687

Total 172,906 143,588 9,431 19,887

Financial liabilities

Payables 19,182 – – 19,182

Total 19,182 – – 19,182

12.3 Foreign exchange risk

Foreign exchange risk arises when future transactions and recognised assets and liabilities are

denominated in a currency that is not MFB’s functional currency (Australian dollar).

MFB has no foreign currency contract obligations as at the end of the ﬁnancial period.

Foreign exchange risk also impacts MFB’s held for trading investments in relation to its investments

in international equities in unlisted trusts. The hedged international equity trust maintains foreign

exchange hedge positions, subsequently foreign exchange risk is minimal; whereas the unhedged

international equity trust is exposed to foreign exchange risk. Foreign exchange risk exposure

relating to held for trading investments is managed by the fund managers and exposure risk on

international equities trust investments is accounted indirectly in the price risk sensitivity analysis

(refer to Note 12.6).

MFB’s overall foreign exchange risk management strategy remains substantially unchanged

from 2013.

MFB Annual Report 2013–14 79

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

12. FINANCIAL INSTRUMENTS (continued)

12.4 Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in

a ﬁnancial loss to MFB. MFB’s maximum credit exposure at reporting date is the carrying amount

of the ﬁnancial assets reported in the balance sheet.

12.4(i) Held for trading ﬁnancial investment assets

Investment controls are in place to minimise credit risk. This includes all security

transactions being settled using approved brokers therefore the risk of default is minimal

as delivery of the securities sold is not settled until the broker has received payment.

Similarly, payment for purchased securities occurs after the securities have been received

by the broker.

12.4(ii) Held to maturity investments receivables and cash balances

MFB investment guidelines manage credit risk pertaining to held to maturity investments

by ensuring investments are restricted to term deposits with TCV.

12.4(iii) Receivables and other ﬁnancial assets

MFB minimises credit risk in relation to receivables by applying commercial payment terms

and recovery processes with all customers, regular review of doubtful debts and the timely

recognition and write-off of bad debts.

Other than the term deposit investments with TCV (AAA credit rating) and ﬁnancial investment

assets which are invested through VFMC in managed funds, MFB has no signiﬁcant concentration

of credit risk in receivables or the other ﬁnancial asset classes. MFB has no guarantees or

securities held against receivables balances.

The Board’s overall credit risk management strategy remains substantially unchanged from 2013.

Further information is shown in Note 5 Receivables.

Financial Financial State Total

Institutions Institutions Government

(not rated) (AA credit agencies

rating) (AAA credit

rating)

$000 $000 $000 $000

Credit quality of contractual

ﬁnancial assets that are neither

past due or impaired

2014

Cash and cash deposits – 14,235 15,000 29,235

Term deposit investments – – – –

Investment ﬁnancial assets *17,366 – 96,648 114,014

Total contractual ﬁnancial assets 17,366 14,235 111,648 143,249

2013

Cash and cash deposits – 9,431 – 9,431

Term deposit investments – – 50,000 50,000

Investment ﬁnancial assets *15,687 – 93,588 109,275

Total contractual ﬁnancial assets 15,687 9,431 143,588 168,706

* Financial investment assets are

investments in primarily unlisted

managed funds which are not

credit rated. The fund managers are

reputable well established institutions

which are reviewed and approved by

VFMC.

Receivables are general invoicing

primarily to individuals and

organisations which do not generally

have recognised credit ratings.

80 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

12. FINANCIAL INSTRUMENTS (continued)

12.5 Liquidity risk

Liquidity risk is the risk that MFB would be unable to meet its ﬁnancial obligations as and when

they fall due, the maximum exposure to liquidity risk is the carrying amounts of ﬁnancial liabilities

as disclosed in the face of the balance sheet. MFB operates under the Government fair payments

policy of settling ﬁnancial obligations within 30 days and in the event of a dispute, making

payments within 30 days from the date of resolution.

MFB has an appropriate liquidity risk management framework for its short, medium and long-

term funding and liquidity management requirements. MFB manages liquidity risk by maintaining

adequate reserves, banking facilities and plans its ﬁnancial obligations based on forecasts of future

cash ﬂows and holds investments and other contractual ﬁnancial assets that are readily tradeable

in the ﬁnancial markets.

The Board’s overall liquidity risk management strategy remains substantially unchanged from 2013.

Carrying Nominal MATUR ITY DATE S

amount amount < 1 1–3 3 months 1–5 5+

month months – 1 year years years

$000 $000 $000 $000 $000 $000 $000

Maturity analysis of

contractual ﬁnancial

liabilities

2014

Financial liabilities

Payables

Supplies and

services 12,252 12,252 11,542 710 – – –

Other payables 5,284 5,284 3,742 – 1,542 – –

Total 17,536 17,536 15,284 710 1,542 – –

2013

Financial liabilities

Payables

Supplies and

services 11,590 11,590 10,189 1,401 – – –

Other payables 7,592 7,592 7,231 361 – – –

Total 19,182 19,182 17,420 1,762 – – –

12.6 Price risk

MFB’s held for trading investment has exposure to price risk relating to investments in unlisted

trusts which ﬂuctuate with changes in market prices. The maximum loss of capital risk resulting

from ﬁnancial instruments is the fair value of the ﬁnancial instruments, except for the TCV deposits

investments where the principal value is stable.

MFB’s market price risk is managed by a signiﬁcant portion of the VFMC portfolio invested in

deposits that are not price sensitive, such as TCV investments. The overall market exposures as at

30 June 2014 are listed in the table below.

Price risk sensitivity

At 30 June 2014, MFB’s market price risk is affected by three main components: changes in actual

market prices, interest rate and foreign currency movements. The following price risk sensitivity

analysis has been based upon the investment classes exposed to price risk at the reporting

date and the change occurring at that time. A 10 per cent change represents management’s

assessment of a reasonably possible change based upon assessment of commonly quoted ASX

indices changes over the past ﬁve years and forecasts by ﬁnancial institutions.

MFB Annual Report 2013–14 81

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

12. FINANCIAL INSTRUMENTS (continued)

12.6 Price risk (continued)

Fair value through proﬁt and loss – held for trading investment in unlisted trusts (by investment

category):

Effective + 10% INCREASE -10% DECREASE

Exposure IN UNIT PRICE IN UNIT PRICE

Income Equity Income Equity

impact impact impact impact

$000 $000 $000 $000 $000

2014

Infrastructure 2,062 206 206 (206) (206)

Property 333 33 33 (33) (33)

Balanced fund 14,971 1,497 1,497 (1,497) (1,497)

Total 17,366 1,736 1,736 (1,736) (1,736)

The effective exposure amounts above reﬂect the carrying amounts.

Fair value through proﬁt and loss – held for trading investment in unlisted trusts (by investment

category):

Effective + 10% INCREASE -10% DECREASE

Exposure IN UNIT PRICE IN UNIT PRICE

Income Equity Income Equity

impact impact impact impact

$000 $000 $000 $000 $000

2013

Infrastructure 2,063 206 206 (206) (206)

Property 1,534 153 153 (153) (153)

Balanced fund 12,090 1,209 1,209 (1,209) (1,209)

Total 15,687 1,568 1,568 (1,568) (1,568)

The effective exposure amounts above reﬂect the carrying amounts.

12.7 Capital risk

MFB manages its capital and regularly prepares forecasts and analysis to ensure the organisation’s

ability to continue as a going concern with an optimal balance of debt and equity.

MFB is not subject to externally imposed capital requirements under our banking contract or other

third party contracts.

12.8 Financial instruments – fair value measurement

MFB considers that the carrying amount of ﬁnancial assets and ﬁnancial liabilities recorded in the

ﬁnancial statements reﬂects their fair values.

The fair values of ﬁnancial assets and ﬁnancial liabilities are determined as follows:

• the fair value of ﬁnancial assets and ﬁnancial liabilities with standard terms and conditions and

traded on active liquid markets are determined with reference to quoted market prices

• the fair value of other ﬁnancial assets and ﬁnancial liabilities that are determined in accordance

with generally accepted valuation models using inputs observed in active markets

• the fair value of unlisted trusts are based upon the redemption price as advised by the fund

manager.

82 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

$000 $000

13. PAYABLES

Current payables

Contractual:

Supplies and services 12,252 11,590

Other payables and accrued expenses 5,284 7,592

17,536 19,182

Statutory:

Amounts payable to government and agencies 2,087 1,072

Total 19,623 20,254

MFB applies the Victorian Government Fair Payment Policy on supplier payments. Accordingly,

suppliers are paid within 30 days from invoice date unless other agreed contractual or legal terms

apply. MFB has procedures in place to ensure that payables are paid within credit timeframes.

Under the Fair Payment Policy MFB may be liable for penalty interest payments on overdue

accounts. No interest penalties were incurred during the period under review (2013: Nil).

MATURITY DATES

Carrying Nominal 1–3 3 months

amount amount months – 1 year

$000 $000 $000 $000

Payables commitment analysis

2014 19,623 19,623 18,081 1,542

2013 20,254 20,254 19,893 361

Note 12 Financial Instruments outlines the nature and extent of risk arising from payables.

MFB Annual Report 2013–14 83

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

$000 $000

14. PROVISIONS

(a) Employee beneﬁts

Current provisions

Annual Leave

Unconditional and expected to be settled within 12 months (i) 17,093 15,957

Unconditional and expected to be settled after 12 months (ii) 11,925 10,653

Accrued Leave

Unconditional and expected to be settled within 12 months (i) 1,473 384

Unconditional and expected to be settled after 12 months (ii) 3,505 2,837

Long Service Leave

Unconditional and expected to be settled within 12 months (i) 4,923 4,923

Unconditional and expected to be settled after 12 months (ii) 51,135 49,738

Enterprise agreement determinations (accrued) – 2,373

90,055 86,865

Provision for on-costs

Unconditional and expected to be settled within 12 months (i) 2,506 1,954

Unconditional and expected to be settled after 12 months (ii) 10,833 10,976

13,339 12,930

Total current provisions 103,394 99,795

Non-current provisions

Employee beneﬁts – long service leave (ii) 3,617 3,561

On-costs (ii) 667 664

Total non-current provisions 4,284 4,225

Total provisions 107,678 104,020

(b) Movement in provisions

Opening balance 13,594 12,934

Additional provisions recognised 10,128 9,426

Reductions arising from payments/other sacriﬁces

of future economic beneﬁts (9,644) (8,525)

Unwind of discount and effect of changes in the discount rate (72) (241)

Closing balance 14,006 13,594

(i) Employee beneﬁts consist of

annual leave and long service leave

accrued by employees. On-costs

such as payroll tax and workers’

compensation insurance are not

employee beneﬁts and are reﬂected

as a separate provision.

(ii) The amounts disclosed are

discounted to present values.

84 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

$000 $000

15. OTHER LIABILITIES

Current balance 740 490

Non-current balance 1,335 1,650

Total 2,075 2,140

The carrying amounts reﬂect income received in advance from the CFA for prepaid future access

to the optical ﬁbre communications network.

16. SUPERANNUATION

MFB employees and members of the Board are entitled to receive superannuation beneﬁts and

MFB contributes to both deﬁned beneﬁt and accumulation contribution plans managed by the

Emergency Services and State Super superannuation fund (ESSS). The deﬁned beneﬁt plan

provides beneﬁts based on years of service and ﬁnal average salary.

MFB does not recognise any deﬁned beneﬁt liability in respect of the plan because MFB has no

legal or constructive obligation to pay future beneﬁts relating to its employees; its only obligation

is to pay superannuation contributions as they fall due. The Department of Treasury and Finance

discloses the State’s deﬁned beneﬁt liabilities in its disclosure for administered items.

However, superannuation contributions paid or payable for the reporting period are included as

part of employee beneﬁts in the comprehensive operating statement of MFB.

During the year, MFB made superannuation payments of $17.6 million (2013: $17.1 million)

primarily to ESSS. In the current year there were no additional payments to superannuation above

the contribution rate designated by ESSS for deﬁned beneﬁt members and the super guarantee

contribution rate of 9.25 per cent for non-deﬁned beneﬁt plan members.

There were no superannuation contributions outstanding at 30 June 2014 (2013: Nil).

Employer contribution rates were:

Accumulation scheme

9.25 per cent of salary for non-operational staff employed after 31 December 1993.

Effective 1 July 2014, the Super Guarantee rate increases to 9.50 per cent and applies to the

accumulation scheme members.

Deﬁned beneﬁts scheme

The average employer contribution rate for the ﬁnancial year was 11.0 per cent (2013: 11.0 per

cent) of salary for all operational staff as well as for non-operational staff employed prior to

1 January 1994.

MFB Annual Report 2013–14 85

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

$000 $000

17. COMMITMENTS FOR EXPENDITURE

The following commitments have not been recognised as liabilities

in the ﬁnancial statements and are exclusive of GST:

Commitments

Capital expenditure commitments

Commitments for the acquisition of property, plant and equipment

contracted at reporting date but not recognised as liabilities:

Payable:

Within one year 11,732 44,827

Total 11,732 44,827

Operating lease commitments

Commitments for minimum lease payments in relation to

non-cancellable operating leases at the reporting date

but not recognised as liabilities:

Payable:

Within one year 644 635

Longer than one year but not longer than ﬁve years 777 324

Longer than ﬁve years 24 –

Total 1,445 959

Recurrent service commitments

Commitments for the acquisition of recurrent goods and services

not recognised as liabilities:

Payable:

Within one year 30,738 17,710

Longer than one year but not longer than ﬁve years 41,874 44,960

Total 72,612 62,670

A signiﬁcant proportion of the above recurrent service commitments relate to MFB’s obligations

under the Statewide Integrated Public Safety and Communications Strategy (SIPSaCS) which

covers call taking and dispatch services. There is an ongoing Service Agreement with the

Emergency Services Telecommunications Authority (ESTA) for the provision of call taking and

dispatch services for the metropolitan district. The ESTA service fees for the year to 30 June 2014

were $11.3 million (2013: $11.8 million).

All the expenditure amounts shown in the above commitments note are nominal amounts.

18. CONTINGENT ASSETS AND CONTINGENT LIABILITIES

The following matters are subject to legal proceedings and MFB has chosen not to disclose further

details due to legal privilege.

Contingent asset

MFB has a claim with the City of Yarra for the recovery of costs relating to remediation of

contamination at the Burnley Complex.

Contingent liability

A claim against MFB has been registered in relation to overtime payment processing for the

Hazelwood coal seam incident, the ﬁnancial effect of the claim cannot be estimated reliably at the

time of preparing these statements.

86 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

$000 $000

19. EQUITY

Reserves

Physical asset revaluation surplus

Land

Balance at beginning of ﬁnancial year 103,352 103,352

Revaluation increments/(decrements) – –

Total 103,352 103,352

Buildings

Balance at beginning of ﬁnancial year 103,998 84,172

Revaluation increments/(decrements) – 19,826

Total 103,998 103,998

Plant and equipment

Balance at beginning of ﬁnancial year 15,338 15,338

Revaluation increments/(decrements) – –

Total 15,338 15,338

Balance at end of ﬁnancial year 222,688 222,688

Accumulated surplus

Balance at beginning of ﬁnancial year 232,234 231,231

Net result 2,047 1,003

Balance at end of ﬁnancial year 234,281 232,234

Contributed capital

Balance at beginning of ﬁnancial year 121,777 121,777

Transactions with owners in their capacity as owners – –

Balance at end of ﬁnancial year 121,777 121,777

Total equity at end of the ﬁnancial year 578,746 576,699

MFB Annual Report 2013–14 87

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

$000 $000

20. NOTES TO THE CASH FLOW STATEMENT

(a) Reconciliation of cash

For the purposes of the cash ﬂow statement, cash comprises

cash on hand, cash at bank, bank overdrafts, deposits at call

and highly liquid investments with short periods to maturity that

are readily convertible to cash on hand and are subject to an

insigniﬁcant risk of changes in value. Cash at the end of the

ﬁnancial year as shown in the cash ﬂow statement is reconciled

to the balance sheet as follows:

Total cash and deposits disclosed in the balance sheet 29,235 9,431

Balance as per cash ﬂow statement 29,235 9,431

(b) Reconciliation of net result for the reporting period to

cashﬂows from operating activities

Net result for the period 2,047 1,003

Non-cash movements

(Gain)/loss on sale or disposal of non-ﬁnancial assets (825) 251

Net loss/(gain) on ﬁnancial instruments (11) 382

Unrealised loss on held for trading investments 413 231

Depreciation and amortisation of non-ﬁnancial assets 23,369 21,005

Impairment of non-ﬁnancial assets 365 355

(Decrease)/increase in allowance for doubtful debts (359) 316

(Decrease) in allowance for inventory obsolescence (42) (48)

Movements in assets and liabilitiess

Decrease/(Increase) in other receivables 2,998 (3,036)

Decrease in inventories 168 10

(Increase) in prepayments (2,402) (4,964)

(Decrease)/increase in payables (631) 1,387

Increase in employee beneﬁts provisions 3,658 5,878

(Decrease) in income received in advance (65) (293)

Net cash inﬂow from operating activities 28,683 22,477

21. BANK OVERDRAFT

MFB has an overdraft facility of $100,000 which is repayable upon demand and may be

cancelled at any time upon review by the bank. As at balance date this facility had not been

utilised (2013: Nil).

88 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

22. RESPONSIBLE PERSONS

In accordance with the Ministerial Directions issued by the Minister for Finance under the Financial

Management Act 1994, the following disclosures are made regarding responsible persons for the

reporting period:

Period of tenure

Responsible The Honorable K Wells MP

Minister Minister for Police and Emergency Services 01/07/13 – 30/06/14

The Honorable E O’Donohue MLC

Acting Minister for Police and Emergency Services 10/07/13 – 28/07/13

The Honorable R Clark MP

Acting Minister for Police and Emergency Services 20/12/13 – 05/01/14

The Honorable E O’Donohue MLC

Acting Minister for Police and Emergency Services 06/01/14 – 12/01/14

Board

Members M N Comrie AO APM – President 01/07/13 – 30/06/14

J A Bonnington 01/07/13 – 30/06/14

K W King 01/07/13 – 30/06/14

A Long – Retired 01/07/13 – 13/09/13

S F Alford – Appointed 14/09/13 – 30/06/14

D Purchase OAM 01/07/13 – 30/06/14

J Lord AM 01/07/13 – 30/06/14

T A Ryan – Appointed 20/08/13 – 30/06/14

Accountable

Ofﬁcers J Higgins ASM – Chief Executive Ofﬁcer 28/04/14 – 30/06/14

R Eddington – Acting Chief Executive Ofﬁcer/

Executive Director 24/12/13 – 03/01/14

R Eddington – Acting Chief Executive Ofﬁcer/

Executive Director 08/02/14 – 17/04/14

N Easy – Chief Executive Ofﬁcer 01/07/13 – 07/02/14

P Rau – Acting Chief Executive Ofﬁcer/Chief Ofﬁcer 18/04/14 – 27/04/14

Related parties

M N Comrie is the Victorian Bushﬁre Royal Commission Implementation Monitor, Chair of

Ministerial Community Advisory Committee on Corrections and Chairman DrinkWise Australia.

J A Bonnington is a Non-Executive Director – Utilities Trust of Australia and HESTA

Superannuation. Community Non Executive Director – Deakin University Council and Director

JS Bonnington & Associates Pty Ltd.

K W King is a Board Member – Natural Resources Conservation League; Australian Research

Centre for Urban Ecology and Director Habitat Melbourne Trust.

D Purchase is Executive Director of the Victorian Automobile Chamber of Commerce.

J Lord is a Member of Ministerial Community Advisory Committee on Corrections.

T A Ryan is Chair of the Advisory Committee of the Ofﬁce of Correctional Services Review; a Non-

Executive Director of Victorian Managed Insurance Authority and a Board Member of Yarra Valley

Water and VicForests.

S F Alford is a Board Member Eastern Health, Audit Committee member Victorian Curriculum

and Assessment Authority, Chair Audit Committee – Australian Accounting Standards Board and

Auditing and Assurance Standards Board.

J Higgins is a Director of the Emergency Services Foundation, Fellow – Australian College of

Ambulance Professionals. Trustee Member, Committee for Economic Development of Australia.

Member, Institute of Public Administration of Australia.

N Easy had a voting right on the Australasian Fire and Emergency Service Authorities Council and

was a Director of the Emergency Services Foundation.

All services and transactions were conducted at arms’ length with the MFB Board and at normal

commercial terms.

MFB Annual Report 2013–14 89

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

Number Number

22. RESPONSIBLE PERSONS (continued)

Remuneration of responsible persons

The number of Responsible Persons is shown below in their

relevant income bands:

Remuneration Band

$ 0 – $ 9,999 1 –

$ 10,000 – $ 19,999 5 4

$ 20,000 – $ 29,999 1 1

$ 50,000 – $ 59,999 1 1

8 6

$000 $000

Total remuneration of Responsible Persons other than the

Responsible Minister: 175 159

The remuneration of the Responsible Minister is reported

separately in the ﬁnancial statements of the Department

of Premier and Cabinet.

Remuneration received by Accountable Ofﬁcers in connection

with the management of MFB during the reporting period

was in the following ranges:

2014 2013

Number Number

Remuneration Band

$ 10,000 – $ 19,999 – 1

$ 50,000 – $ 59,999 1 –

$ 250,000 – $ 259,999 1 –

$ 370,000 – $379,999 – 1

2 2

$000 $000

Total remuneration of Accountable Ofﬁcers: 312 391

During the current period, the following personnel performed as Acting Chief Executive Ofﬁcer:

Russell Eddington Executive Director Corporate Services 24/12/2013 – 03/01/2014

Russell Eddington Executive Director Corporate Services 08/02/2014 – 17/04/2014

Peter Rau Chief Ofﬁcer 18/04/2014 – 27/04/2014

Accountable Ofﬁcer remuneration includes all remuneration including salary, salary sacriﬁce,

fringe beneﬁts applicable, leave entitlements paid and applicable performance bonus paid

during the period. The above amounts record payments made in each year, accordingly accrued

remuneration pertaining to 2013 was included in 2014.

90 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

23. REMUNERATION OF EXECUTIVE OFFICERS AND PAYMENTS TO

OTHER PERSONNEL

The number of executive ofﬁcers, other than Ministers and Accountable Ofﬁcers and their total

remuneration during the reporting period is recorded in the ﬁrst two columns in the table below

in their relevant income bands. These tables include staff who are placed on a short-term basis

in executive positions temporarily when the positions are vacant due to retirement, long service

leave and similar. The base remuneration of executive ofﬁcers is recorded in the third and fourth

columns. Base remuneration is exclusive of bonus payments, long service leave payments,

redundancy payments and retirement beneﬁts.

Several factors have affected total remuneration payable to executives over the ﬁnancial year,

primarily bonus payments based upon individual employment contracts, payments taken in lieu of

leave and the duration of employment during the ﬁnancial year.

A number of executive ofﬁcers retired or resigned in the past year. This impacted on both the total

number of executives included below and on total remuneration ﬁgures due to the inclusion of

annual leave and long-service leave payments. Additionally, part year employment arrangements

and short term placement into executive positions are accounted for in the total number of

executives and annualised employee equivalent numbers represented below.

Total remuneration Base remuneration

2014 2013 2014 2013

No. No. No. No.

Executive Ofﬁcers

Remuneration Band

$ 0 – $ 99,999 * 8 4 11 9

$ 100,000 – $ 109,999 1 3 1 2

$ 110,000 – $ 119,999 – 1 2 3

$ 120,000 – $ 129,999 1 1 3 1

$ 130,000 – $ 139,999 2 1 – 2

$ 140,000 – $ 149,999 1 – 3 2

$ 150,000 – $ 159,999 1 2 6 5

$ 160,000 – $ 169,999 3 4 3 1

$ 170,000 – $ 179,999 3 5 4 15

$ 180,000 – $ 189,999 2 7 13 2

$ 190,000 – $ 199,999 3 3 2 –

$ 200,000 – $ 209,999 8 4 – –

$ 210,000 – $ 219,999 3 1 – –

$ 220,000 – $ 229,999 3 4 2 2

$ 230,000 – $ 239,999 3 1 – 1

$ 240,000 – $ 249,999 2 – – –

$ 250,000 – $ 259,999 1 1 – –

$ 260,000 – $ 269,999 2 – – –

$ 270,000 – $ 279,999 1 1 – –

$ 280,000 – $ 289,999 1 – – –

$ 290,000 – $ 299,999 1 – – –

$ 300,000 – $ 309,999 – 1 – –

$ 340,000 – $ 349,999 – 1 – –

Total number of executive ofﬁcers 50 45 50 45

Total annualised employee equivalent (AEE) (i) 42 37 42 37

Total remuneration ($000) 9,215 8,059 7,017 6,240

Correction of Prior Reporting Period Error

The 2012–13 comparative information has been restated. The data for the prior year was collated

manually from the payroll system and had inaccuracies whereas a report has since been created

to detail all executives and persons acting in the role of a vacant executive position and more

reliably provides the data for the current and prior reporting periods.

The restatement resulted in total base remuneration altering from $6.906 million to a revised

$6.240 million; total remuneration was revised from $7.880 million to $8.059 million. AEE reduced

from 38 to 37.

(i) Annualised employee equivalent is

based on paid working hours of 38

ordinary hours per week over the

52 weeks for a reporting period.

(ii)* A number of executives received

base and total remuneration

in the 2012/13 ﬁnancial year

below $100,000 due to part

year employment and short term

placements in executive positions.

MFB Annual Report 2013–14 91

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

2014 2013

$000 $000

23. REMUNERATION OF EXECUTIVE OFFICERS

AND PAYMENTS TO OTHER PERSONNEL

(continued)

The above remuneration amounts include leave or termination

payments of:

Remuneration Band

$ 0 – $ 99,999 1 67

$ 100,000 – $ 109,999 – 74

$130,000 – $ 139,999 – 121

$190,000 – $ 199,999 – 12

$220,000 – $ 229,999 – 116

$230,000 – $ 239,999 – 56

$270,000 – $ 279,999 101 –

$290,000 – $ 299,999 106 –

$340,000 – $ 349,999 – 307

Total 208 753

Payments to other personnel (i.e. contractors with signiﬁcant management

responsibilities)

There were no payments made to other personnel in 2014 (2013: Nil).

24. REMUNERATION OF AUDITORS

Total remuneration payable to the Auditor-General for auditing the ﬁnancial statements for the year

ended 30 June 2014 was $100,350 (2013: $100,350).

25. SUBSEQUENT EVENTS

There are no other material subsequent events since reporting date.

92 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

26. GLOSSARY OF TERMS AND

STYLE CONVENTIONS

Amortisation

Amortisation is the expense which results

from the consumption, extraction or use over

time of a non-produced physical or intangible

asset. This expense is classiﬁed as an other

economic ﬂow.

Comprehensive result

The net result of all items of income and

expense recognised for the period. It is the

aggregate of operating result and other

comprehensive income.

Commitments

Commitments include those operating, capital

and other outsourcing commitments arising

from non-cancellable contractual or statutory

sources.

Depreciation

Depreciation is an expense that arises from

the consumption through wear or time of a

produced physical or intangible asset. This

expense is classiﬁed as a ‘transaction’ and so

reduces the ‘net result from transaction’.

Effective interest method

The effective interest method is used to

calculate the amortised cost of a ﬁnancial

asset or liability and of allocating interest

income over the relevant period. The effective

interest rate is the rate that exactly discounts

estimated future cash receipts through the

expected life of the ﬁnancial instrument, or,

where appropriate, a shorter period.

Employee beneﬁts expenses

Employee beneﬁts expenses include all costs

related to employment including wages and

salaries, fringe beneﬁts tax, leave entitlements,

redundancy payments, deﬁned beneﬁts

superannuation plans and deﬁned contribution

superannuation plans.

Ex-gratia expenses

Ex-gratia expenses mean the voluntary

payment of money or other non-monetary

beneﬁt (eg: a write-off) that is not made either

to acquire goods, services or other beneﬁts for

the entity or to meet a legal liability, or to settle

or resolve a possible legal liability or claim

against the entity.

Financial asset

A ﬁnancial asset is any asset that is:

(a) cash;

(b) an equity instrument of another entity;

• to receive cash or another ﬁnancial asset

from another entity; or

• to exchange ﬁnancial assets or ﬁnancial

liabilities with another entity under

conditions that are potentially favourable

to the entity; or

(d) a contract that will or may be settled in the

entity’s own equity instruments and is:

• a non-derivative for which the entity is

or may be obliged to receive a variable

number of the entity’s own equity

instruments; or

• a derivative that will or may be settled

other than by the exchange of a ﬁxed

amount of cash or another ﬁnancial

asset for a ﬁxed number of the entity’s

own equity instruments.

Financial instrument

A ﬁnancial instrument is any contract that gives

rise to a ﬁnancial asset of one entity and a

ﬁnancial liability or equity instrument of another

entity. Financial assets or liabilities that are

not contractual (such as statutory receivables

or payables that arise as a result of statutory

requirements imposed by governments) are

not ﬁnancial instruments.

Financial liability

A ﬁnancial liability is any liability that is:

(a) A contractual or statutory obligation:

(i) to deliver cash or another ﬁnancial asset

to another entity; or

(ii) to exchange ﬁnancial assets or

ﬁnancial liabilities with another entity

under conditions that are potentially

unfavourable to the entity; or

(b) A contract that will or may be settled in the

entity’s own equity instruments and is:

(i) a non-derivative for which the entity is

or may be obliged to deliver a variable

number of the entity’s own equity

instruments; or

(ii) a derivative that will or may be settled

other than by the exchange of a ﬁxed

amount of cash or another ﬁnancial

asset for a ﬁxed number of the

entity’s own equity instruments. For

this purpose the entity’s own equity

instruments do not include instruments

that are themselves contracts for the

future receipt or delivery of the entity’s

own equity instruments.

Financial statements

A complete set of ﬁnancial statements

comprises:

(a) a balance sheet as at the end of the period

(b) a comprehensive operating statement for

the period

period

(d) a cashﬂow statement for the period

(e) notes, comprising a summary of signiﬁcant

accounting policies and other explanatory

information

(f) comparative information in respect of

the preceding period as speciﬁed in

paragraphs 38 of AASB 101 Presentation

of Financial Statements

(g) a statement of ﬁnancial position as at the

beginning of the preceding period when

an entity applies an accounting policy

retrospectively or makes a retrospective

restatement of items in its ﬁnancial

statements, or when it reclassiﬁes items in

its ﬁnancial statements in accordance with

paragraphs 41 of AASB 101.

Intangible assets

Intangible assets represent identiﬁable non-

monetary assets without physical substance.

Interest expense

Costs incurred in connection with the

borrowing of funds includes interest on bank

overdrafts and short-term and long-term

borrowings, amortisation of discounts or

premiums relating to borrowings, interest

component of ﬁnance leases repayments and

the increase in ﬁnancial liabilities and non-

employee provisions due to the unwinding of

discounts to reﬂect the passage of time.

Interest income

Interest income includes unwinding over time

of discounts on ﬁnancial assets and interest

received on bank term deposits and other

investments.

Net acquisition of non-ﬁnancial assets

(from transactions)

Purchases (and other acquisitions) of non-

ﬁnancial assets less sales (or disposals) of

non-ﬁnancial assets less depreciation plus

changes in inventories and other movements

in non-ﬁnancial assets. It includes only those

increases or decreases in non-ﬁnancial assets

resulting from transactions and therefore

excludes write-offs, impairment write-downs

and revaluations.

Net result

Net result is a measure of ﬁnancial

performance of the operations for the period. It

is the net result of items of income, gains and

expenses (including losses) recognised for the

period, excluding those that are classiﬁed as

‘other economic ﬂows – other comprehensive

income’.

Net result from transactions /net

operating balance

Net result from transactions or net operating

balance is a key ﬁscal aggregate and is income

from transactions minus expenses from

transactions. It is a summary measure of the

ongoing sustainability of operations.

It excludes gains and losses resulting from

changes in price levels and other changes

in the volume of assets. It is the component

of the change in net worth that is due to

transactions and can be attributed directly to

government policies.

Net worth

Assets less liabilities, which is an economic

measure of wealth.

Non-ﬁnancial assets

Non-ﬁnancial assets are all assets that are not

‘ﬁnancial assets’. It includes inventories, land,

buildings, infrastructure, road networks, land

under roads, plant and equipment, investment

properties, cultural and heritage assets,

intangible and biological assets.

Non-produced assets

Non-produced assets are assets needed for

production that have not themselves been

produced. They include land, subsoil assets

and certain intangible assets. Non-produced

intangibles are intangible assets needed for

production that have not themselves been

produced. They include constructs of society

such as patents.

Other economic ﬂows included in

net result

Other economic ﬂows are changes in the

volume or value of an asset or liability that do

not result from transactions. It includes:

• gains and losses from disposals,

revaluations and impairments of non-

ﬁnancial physical and intangible assets

• fair value changes of ﬁnancial instruments.

Other economic ﬂows – other

comprehensive income

Other economic ﬂows – other comprehensive

income comprises items (including

reclassiﬁcation adjustments) that are not

recognised in net result as required or

permitted by other Australian Accounting

Standards.

The components of other economic ﬂows –

other comprehensive income include:

(a) changes in physical asset revaluation

surplus;

(b) share of net movement in revaluation

surplus of associates and joint ventures;

and

available-for-sale ﬁnancial assets.

Payables

Includes short and long term trade debt and

accounts payable, grants and interest payable.

MFB Annual Report 2013–14 93

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Receivables

Includes short and long term trade credit and

accounts receivable, accrued investment

income, grants, taxes and interest receivable.

Sales of goods and services

Refers to income from the direct provision of

goods and services and includes fees and

charges for services rendered, sales of goods

and services, fees from regulatory services and

work done as an agent for private enterprises.

It also includes rental income under operating

leases and on produced assets such as land.

User charges includes sale of goods and

services income.

Supplies and services

Supplies and services generally represent cost

of goods sold and the day-to-day running

costs, including maintenance costs, incurred in

the normal operations of MFB.

Transactions

Transactions are those economic ﬂows that

are considered to arise as a result of policy

decisions, usually an interaction between

two entities by mutual agreement. They also

include ﬂows in an entity such as depreciation

where the owner is simultaneously acting as

the owner of the depreciating asset and as

the consumer of the service provided by the

asset. Transactions can be in kind (e.g. assets

provided/given free of charge or for nominal

consideration) or where the ﬁnal consideration

is cash. In simple terms, transactions arise

from the policy decisions of the government.

Style conventions

Figures in the tables and in the text have been

rounded. Discrepancies in tables between

totals and sums of components reﬂect

rounding. Percentage variations in all tables are

based on the underlying unrounded amounts.

The notation used in the tables is as follows:

– zero, or rounded to zero

xxx.x) negative numbers

201x year period

201x–1x year period

The ﬁnancial statements and notes are

presented based on the illustration for a

government department in the 2013–14 Model

Report for Victorian Government Departments.

The presentation of other disclosures is

generally consistent with the other disclosures

made in earlier publications of MFB’s annual

reports.

94 MFB Annual Report 2013–14

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

We certify that the attached ﬁnancial statements have been prepared for the Metropolitan Fire

and Emergency Services Board in accordance with Standing Direction 4.2 of the Financial

Management Act 1994, applicable Financial Reporting Directions, Australian Accounting

Standards, including interpretations and other mandatory professional reporting requirements.

We further state that in our opinion, the information set out in the comprehensive operating

statement, balance sheet, statement of changes in equity, cash ﬂow statement and accompanying

notes forming part of the ﬁnancial statements presents fairly the ﬁnancial transactions during the

year ended 30 June 2014 and ﬁnancial position of the Metropolitan Fire and Emergency Services

Board as at 30 June 2014.

At the time of signing, we are not aware of any circumstance which would render any particulars

included in the ﬁnancial statements to be misleading or inaccurate.

We authorise the attached ﬁnancial statements for issue on 12 August 2014.

Neil Comrie AO, APM

President

Melbourne

12 August 2014

James Higgins ASM

Chief Executive Ofﬁcer

Melbourne

12 August 2014

Russell Eddington

Executive Director, Corporate Services

Melbourne

12 August 2014

MFB Annual Report 2013–14 95

RESPONSIBLE PERSONS’ AND CHIEF FINANCE AND

ACCOUNTING OFFICER’S DECLARATION

96 MFB Annual Report 2013–14

MFB Annual Report 2013–14 97

MFB Headquarters, 456 Albert Street,

East Melbourne Victoria 3002 Australia.

Telephone +61 3 9662 2311

Facsimile +61 3 9665 4244

www.mfb.vic.gov.au

ABN 28 598 558 561

98 MFB Annual Report 2013–14

CDC 91 MFB Annual Report 2014 15 566142db C193 4cdc 91c0 4c8b1a221e96 0

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