30 May 2018

Mayor Phil Goff

OPEN LETTER

Dear Mayor

Collaborative Council-industry approach to waste management essential

By now you will be aware there are significant concerns in the business community over the shape and direction of Auckland Council’s draft waste strategy. These were set out in submissions to the draft plan by at least four of Auckland’s major waste management companies as well as other groups and my article published in the NZ Herald on 24 May.

The Auckland Business Chamber of Commerce’s interest to look into these concerns is in response to a request by waste industry representatives. Our review of the draft waste plan was not easy; it is a lengthy document with numerous Appendices and proposals for Council to change and expand its waste collection services.

Certainly, I accept that the approach to the Chamber for help by waste industry companies could be viewed as motivated by ‘vested interest’.

However, it quickly became obvious that the Council’s draft plan also has a ‘vested interest’ that it is wanting to protect, as evidenced by ignoring its own advice to ‘proceed with caution’ to adopt proposals that duplicate services of existing firms already operating successful site waste plans1 and also the numerous examples dotted through the plan showing services where Council is competing, or wants to compete, with the private sector (See Attachment to this letter).

The response of Council’s Environment Committee chair, Cr Penny Hulse, to my Herald article has only served to reinforce the shortcomings which so concern the industry. She claims the private sector in Kapiti “decided to withdraw their collection services because it no longer made them money” (NZ Herald, 28 May). This is completely wrong – Kapiti’s waste services are 100% operated by the private sector. A Wellington Region Waste Survey in 2016 confirmed that Kapiti has the highest rate of kerbside recycling in greater Wellington, and is well ahead of council-run services in terms of waste diversion and recycling.

Our review of both the Council’s draft plan and the submissions of waste industry businesses nonetheless confirmed that both parties want to deliver the best possible environmental gains and a higher recycling rate.

1
See Auckland Council Waste Services Value for Money 17A review, p.46.

On that basis the Chamber strongly encourages the Mayor and councillors to adopt an amendment before finalising the draft waste plan to make it clear that as a minimum, waste minimisation plan expenditure only be approved after independent cost-benefit confirmation that any Council intervention will lead to better environmental outcomes, the counterfactual being waste and recycling rates achieved through fully commercial service delivery.

The Council’s 17A review recommended stronger economic disciplines be adopted when evaluating and expanding waste services. The review was subsequently endorsed unanimously by the Finance and Performance Committee last November. Yet the draft waste strategy contains no supporting cost-benefit analysis. This should be remedied.

A suggested wording for the amendment might be as follows:

• Council recognises that the private sector provides an essential role in the provision of waste collection services and is an important partner of Council. Council will only seek to provide alternative competing services when:

o there is clear market failure in service delivery and environmental outcomes;

o the Council demonstrates clearly (by cost-benefit assessment) it is able to provide the services at cheaper rates on a user pays basis with no additional rates subsidy; and/or

o current services being offered by the private sector do not promote waste recovery.

From our assessment, the Chamber and the waste industry are in total agreement with Council that there are huge waste challenges ahead:

• Auckland’s rapid growth and expanded residential and commercial building programmes will add pressure to both household and commercial waste services;

• The China decision to stop receiving waste for recycling puts pressure on NZ – not just Auckland – to come up with our own answers.

• Changing weather patterns are exacerbating the spreading of waste and litter into our harbours and onto beaches.

If waste diversion rates are to increase, there needs to be an efficient and effective way to process and reuse recycled materials; at the moment there isn’t on the scale required.

A collaborative approach will be essential

If we, by which I mean Council, the waste industry and Aucklanders together, are to make realistic progress to reduce the amount of waste going to landfills and increase recycling the first step should involve forming a shared partnership setting out what each other’s role and responsibilities are.

From my standpoint a proven model free of conflict-of-interest challenges and ‘vested interest’ accusations are where Council’s role is to set and administer Auckland’s waste management regulations, the industry’s role is to deliver services efficiently in a way that achieves positive environmental outcomes.

That doesn’t mean that the Council should not strongly empower more community groups to get involved in the waste management task; and it doesn’t mean that the industry should opt out of a community role as part of delivery of commercial services.

What it means is that if Auckland is to succeed in getting on top of its waste management issues Council and the industry need to find a way to work together.

It is a total misinterpretation of my comments – and the industry’s submissions – for Cr Hulse to claim that the Chamber wants Auckland Council to stay out of the waste industry.

For all the above reasons, the advantages to Council (and rate payers) of adopting our suggested amendment should be obvious to every councillor. Bluntly, not to adopt it would be a mistake and short-sighted.

In going forward, it is important that councillors note that waste industry representatives have publicly indicated a willingness to forge a council-waste industry partnership, as does the Auckland Business Chamber of Commerce.

We want to meet with the Mayor, deputy Mayor and waste sub-committee members to expand how we envisage the partnership working in the best interests of getting on top of Auckland’s waste challenges and opportunities.

Yours sincerely

Michael Barnett

Attachment: Examples of waste services Auckland Council plans to compete with existing successful private sector services.

28 May 2018

EXAMPLES OF WASTE SERVICES AUCKLAND COUNCIL PLANS TO COMPETE WITH EXISTING SUCCESSFUL PRIVATE SECTOR SERVICES:

The following are examples in Auckland Council’s waste management plans where Councils intentions to compete with the private sector are evident:

1. The development of alternative wood waste recovery facility – Refer Page 3 Appendix C Resource Recovery Plan and Page 8 which outlies the intention to specifically make a Council investment into and diversify the Waitakere Council owned Facility. As was presented in evidence during submissions by Green Gorilla they have already made a substantial investment in this plant and Council investment would undermine these

2. The expansion of community recycling facilities that will compete with existing private sector facilities that are being diversified to enable greater recovery. This was a strong point made by both Northland Waste, EnviroWaste Services Ltd and Waste Management. It should be noted that these facilities are current subsidised by Council in direct competition to private facilities and the number of Council funded facilities is to be dramatically increased. This is outlined throughout the Waste Plan - page 15, provides an overview of their action plan. Also refer section 17 a review page 47 which states that Council need a business case.

3. The expansion of current Council domestic refuse collection service to service commercial premises. Refer page 87 of the Draft Waste Plan. Commercial wheelie bin refuse collection services are currently provided by the private sector with very little service to commercial premises serviced by Council. The plan is quite misleading in that it portrays an image whereby it is common place for Council to service commercial premises through their domestic contracts. This is simply not the case at present but the plan gives them the power to dramatically expand this area of business.

4. The expansion of Council into commercial foodwaste collection of the back of the proposed household foodwaste collection. Refer page 87 of the Draft Waste Minimisation Plan. NB the private sector currently provides food waste collection to commercial premises.

5. The Council] can do more to help minimise all waste that is produced in Auckland, including the waste that is managed by the commercial sector. (Refer p. 8, WWWP)

6. With more direct influence over collection systems, [the Council] can really lead the way and show the potential for waste minimization. (Refer p.12, WWWP

7. Private ownership of landfills is unusual in New Zealand, where local councils often own their local landfills and are better able to manage the whole supply chain. (Refer, p.40-41 WWWP)

Also

8. The Requirement for “Site Waste Management Plans” that we believe will lead to Building/Resource Consent Controls and rules that force business owners into resource Recovery even when it may not be economic. Refer Page Appendix A Waste Management Options Page 10. Although not Council playing in the commercial market as per the above examples, it will place real costs on business and the section 17a reviews specifically recommended that Council should service caution if proceeding down this path. Refer Page 35 Section 17A value for money review.

9. You can also note that numerous submitters expressed serious concerns about Auckland Council taking a more active role in the commercial waste sector in Auckland than it already does, and underplaying the important role that private operators play, and especially failing to undertake a benefit-cost assessment of its proposed service expansion to test whether the private sector could provide the service cheaper - without Council having to resort to rate payer money – and more efficiently.

10. What the waste industry submitters all want is for Council (Penny Hulse) to provide absolute assurance to ratepayer that she will not seek to use rates to subsidise Council services if they prove less efficient than the private sector.

• Here is the link to Council’s draft waste plan: https://www.aucklandcouncil.govt.nz/have-your-say/topics-you-can-have-your-say-on/waste-minimisation-management-plan/Pages/consultation-documents.aspx#panelLinks The key documents are The draft waste plan, and scroll down you will find all of the appendix which are separate from the plan.

Michael Barnett

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