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“Race to The Bottom” In Waste Collection has to End – Minister Kelly

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“Race to The Bottom” In Waste Collection has to End – Minister Kelly

Mandatory Service Levels and Customer Charter for Waste Collectors to be introduced next year

Minister Warns Waste Collectors they are in “Last chance Saloon” with new reforms

Speaking at the Environment Ireland Conference, Croke Park, Thursday, Sept 11th, 2014, Minister Kelly said, “I am an advocate of competition for the market and I make no secret of that fact. I believe that a system of competitive tendering operated by local authorities, either individually or working on a regional or sub-regional basis, can help to provide a robust structure for the collection of household waste in Ireland, for the following reasons:

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  • Competitive tendering can ensure that competition occurs ex ante and in a manner which is transparent to the awarding authority.
  • It gives local authorities significant market power to maximise the common good, and to establish the specific terms and service conditions of the contract, such as levels of service, price and pricing structure, monitoring and adherence to environmental objectives.
  • Franchise bidding can also help to drive cost reductions for industry, typically through more efficient use of capital infrastructure and staffing costs. Regular renewal of the franchise ensures that the franchise winner has an interest in maintaining a positive relationship with the local authority, and its customers.

We have moved in a relatively short space of time from a system in which municipal waste authorities had full control over the waste market, but were over-stretched and under-resourced to do the job and operate to the standards required under national and EU law, to a situation in which we have handed over responsibility to the private sector, without giving the State adequate levers with which to regulate how services are provided.

This is the worst of both worlds in my view. And it has to change.

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A far smoother transition would have been possible, had we moved from local authority direct provision to competition for the market.

If I was starting with a blank page, I would instruct local authorities to do just that or some variation of it. However we find ourselves in a different situation currently.

I have some significant concerns regarding the current performance of the household waste industry, for example:

  • the level of below-cost selling, the so-called “race to the bottom” and the environmental damage that can arise from this.
  • the de-stabilising effect this can have on the market generally and the extent to which it is discouraging investment in the development of badly needed indigenous waste treatment capacity.
  • the levels of customer service offered by a number of collectors, who are often merely ticking boxes when it comes to their customer charters, or implementation of the three-bin system without trying to drive more responsible behaviour or offer incentives.
  • the current compliance levels and number of enforcement actions that the EPA and local authorities are having to take against large and high profile collectors, of whom we should all expect better.

I am also very concerned that some operators appear to be ignoring some of their statutory obligations in certain areas by, for example, failing to roll-out brown bin collection services, despite the requirement to do so under the 2012 Household Food Waste Regulations.

All of these factors suggest to me that we have an industry that needs to be radically shaken up, modernised and professionalised. And it is my intention to do this and end this “race to the bottom”.

It is stated Government policy that household waste collection will be organised under an improved regulatory regime. My Department has been working for some time on a new regulatory regime to provide for that and to introduce a number of very fundamental changes to how the collection regime operates.

From next year, a number of measures will be introduced to specifically tackle these issues. To incentivise the greater reduction of waste and to move towards the long-term goal of zero waste, paying by weight for collection will become a reality for all consumers. Waste collection companies will also be signing up to specifically mandated service levels as well as statutory customer charters while a ban on the below-cost selling of waste will be introduced. The failure to adhere to agreed service levels will automatically result in a permit review – something that has not been seen before. This will create a challenge for waste collectors but to put it simply, something must be done.

Notwithstanding my preference for a system of franchise bidding, I am prepared to proceed with the reform programme, to give it the necessary teeth to make it as effective as possible and to give it a chance to bed in.

The “Race to the Bottom” is also directly contributing to a destabilising of the industrial relations situation in the waste sector – something that is benefitting neither customer, nor worker, nor the environment. I support the concept a statutory wage-setting mechanism for the industry to ensure stability, certainty and industrial peace. I know as recently as this week that Minister Nash’s Department of Jobs, Enterprise & Innovation has written to the Labour Court requesting examination of such a concept as part of the process around such agreements.

However, if next year the level of compliance with the new reforms is not sufficient, then I am prepared to take steps next year to review the current regime and system and consider other market approaches that can deliver the necessary improvements for all household waste collection markets in Ireland.

In that regard, the waste industry needs to be clear though: the new regulatory framework is the “last chance saloon” for the industry to demonstrate that they can work individually and collectively to improve performance, standards and levels of service and compliance records. I will give consideration to introducing a different market structure in the future if this does not occur.

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