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THE Water Corporation has launched a business improvement program that is likely to lead to further staff cuts.

Chairman Tim Ungar said the review would focus on the range and scope of functions provided by the water utility, which has already cut about 150 staff over the past two years.

When asked about rumours the review would lead to large staff cuts and compress the current five operating divisions into two, Mr Ungar said it was premature to comment on the likely outcome.

“We are not on the cusp of major change,” he said.

“It is too early to make a call on that.”

He said changes to the current divisional structure were “a possibility but by no means set in concrete”.

“I would say that a major restructure is overstated.”

He added that “we’ve looked at a couple of areas that could be more efficient”.

Mr Ungar said the review emerged from a strategy session by the board and senior management, led by managing director Jim Gill, at the end of July.

“As a responsible board we have an ongoing duty to make sure the organisation is as efficient and effective as possible,” he said.

“This is the start of an ongoing program.”

The review gives Mr Ungar an opportunity to put his stamp on the organisation.

After being appointed a director in January 2002, he succeeded long-serving chairman Peter Jones at the start of this year.

His appointment as chairman coincided with a shake-up of the seven-member board, with Churchill Capital director Patrick O’Connor, Poynton & Partners’ director Tracey Horton and Brightwater CEO Penny Flett joining as directors at the same time.

The latest review comes 18 months after the Water Corporation instituted a “major review” of operating costs.

“The impact of the drought and other pressures on the business required the corporation to focus on reduction of costs in the latter half of the year,” it says in last

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year’s annual report.

That review led to a reduction of more than 120 positions across the organisation.

The total reduction in staff numbers over the past two years is about 150, to 2,000 (full-time equivalent) presently.

The Water Corporation’s financial performance will become clearer next month when Government Enterprises Minister Nick Griffiths releases its annual results for the 12 months to June 2003.

However,  the 2002-03 budget figures, released this week, by State Treasury disclosed an increase in the corporation’s profits as a result of higher than expected contributions from land developers.

In the 2001-02 financial year its net profit dipped 2.9 per cent to $296 million despite a small increase in income to $1.05 billion.

The review will provide an opportunity to assess some of the changes adopted by the Water Corporation, including outsourcing of key activities to the private sector.

For instance, since 1995, it has outsourced the operation and maintenance of water, wastewater and drainage systems in Perth.

It extended this arrangement in October last year, when it awarded a five-year $90 million ‘alliance’ contract to Thiess to provide these services north of the river and a similar five-year $70 million contract to United Group for south of the river.

The Water Corporation also outsourced most of its design and construction work in the mid 1990s, initially to engineering firm GHD and latterly to a panel of firms. Other functions presently outsourced include meter reading, surveying, drilling services and fleet management.

It presently has five operating divisions, with the largest being customer services.

Other divisions are engineering and contracts; finance; planning and development; and water technologies.

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