Territory Stories

9.1 The Board’s Strategic Directions 2016-2020 May 2016



9.1 The Board’s Strategic Directions 2016-2020 May 2016

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Tabled paper 1883


Tabled Papers for 12th Assembly 2012 - 2016; Tabled Papers; ParliamentNT






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2. Executive Summary The Board of Directors ('the Board') of the Power and Water Corporation ('Power and Water') recognises that recent developments have revealed a number of areas of financial, governance and operating under performance which predated structural separation. Most immediately, as highlighted by the Auditor General's examination of the 2014-15 annual financial statements, Power and Water's contribution to the effective separation of financial reporting between the three government-owned (power) corporations fell short in a number of respects. Significant issues within the Corporation's business systems and processes are largely at fault. In particular, asset management and financial management information, processes and systems all require significant work to get to an acceptable level. The interfaces between the Corporation's various financial systems are also in need of significant rework. More fundamentally, Power and Water's financial performance has lagged behind that of comparable utilities. The Board's analysis paints an overall picture of the Corporation having higher costs and generally lower performance results than industry peers. There are unique Northern Territory operating factors that undoubtedly contribute to higher input costs. However, these factors are not the sole reason for the Corporation's under-performance and higher cost base. Other causes inherent in the way the Corporation operates certainly also contribute to poor financial outcomes. The most obvious issues are the large corporate overhead, and problems in relation to information technology system effectiveness, general financial and core operating practices, and project initiation and delivery - all reflecting gaps in planning, controls and accountability. Looking ahead, Power and Water is also facing a range of emerging external factors that will challenge the Corporation's ability to deliver on its objectives and fulfil operational and financial performance obligations. Failure to respond to either set of issues increases the risk that consumer prices and/or the Corporation's reliance on taxpayer support will be higher than necessary. Responsibility for addressing all these issues rests with the Corporation's Board and executive management team. The Board and management now in place have committed to addressing these issues systematically and sustainably. There is a need to act now. The Corporation has already reviewed (and is resetting and simplifying) business processes and systems to address deficiencies, in order to build the foundations for improved transparency, accountability and performance. In addition, the Board's strategic analysis has highlighted the need for an approach to business improvement that differs fundamentally from previous attempts. Accordingly, the Board has initiated a Business Transformation Program to provide greater assurance that the Board's strategic goals will be delivered. The Program's initiatives will ensure the Corporation delivers performance improvements for its customers, the government and the Northern Territory community. The Program reflects the Board's vision for Power and Water as a customer-centric, multi-utility corporation that delivers services at benchmark costs. The Business Transformation Program will involve a strategic, top-down approach that is planned and implemented in a formal, structured manner. Key to the Program's success is the establishment of an effective Project Management Office (PMO). The PMO will act as custodians for the Business Transformation Program reporting directly to the Chief Executive. Many existing projects and initiatives, such as the Financial Management Improvement Program, the Asset Management Capability project and the IT Strategy will come under the Business Transformation Program, with PMO oversight. Some planned projects may be stopped as the PMO begins priority project identification to support achievement of the Board's objectives and goals. The Board has also requested that the Business Transformation Program be funded by re-directing funding from stopped projects to Business Transformation Program priority projects. THE BOARD'S STRATEGIC DIRECTIONS 2016-2020