[Not government policy]
5. Positions and possibilities – findings from interviews
5.1 Why would a levy be charged on waste
This section is not prefaced by one entitled “should waste generation or disposal be levied?” Why is this? It would be tempting to say it is because there is a general consensus that waste levies have a role, and in some areas a successful track record. That is almost the case and supporters of the waste levy include major waste companies, local authorities and NGOs. But there is more to the story.
Amongst the interviewee group it would be more correct to acknowledge that the present situation reflects the determination of the Auckland North-West Alliance to have a waste collection levy on the one hand, and an acceptance by the large waste collection and recycling companies that a waste disposal levy wouldn’t necessarily be a bad thing – subject to its design and operation.
It is around the design that the divide is set with greatest clarity. Most Territorial Local Authorities favour a local or regional levy and most large waste companies favour a national one. None of the parties interviewed had no view formed on this matter.
The two reasons for having a waste levy that came through the local government/central government waste minimisation and management work are:
- to generate revenue to assist waste minimisation (reclaim, reuse, recycle) activities, and
- to establish a financial hurdle to incentivise alternative waste generation and disposal behaviour.
No party interviewed had a strong view against either objective although some favoured one over the other. The general consensus reflects the wide acceptance of the ‘user pays’ principle.
There is widespread support from interviewees for the first purpose, subject of course to its design and operation. The strongest qualification from the Territorial Local Authorities, is, and without compromise, the need for the majority of the funds to be returned to the Territorial Local Authority whose citizens had generated them. Current sources of funds for waste minimisation and related waste management activities for many local authorities is general rates, a funding source that is neither secure nor large (indeed for some Territorial Local Authorities there is no budget for waste minimisation activities).
The strongest qualification from the large waste companies is that a levy should not in any way support ‘commercial’ waste activities by Territorial Local Authorities in competition with them (issues around the collection and distribution of levy funds are discussed below).
All organisations are informed and influenced by the recent history of the New South Wales waste levy which was hypothecated (repatriated for waste management purposes) at a rate of 55% at the time it was established but subsequently completely absorbed into the state government coffers.
The organisations involved in reclaiming, reusing or recycling waste firmly believe that a landfill disposal cost increase of as little as $10/tonne will lead to increased diversion rates [One organisation favoured a targeted levy system on particular waste, and outright bans on others]. This is particularly so of green waste and putrescibles. It was claimed that this price barrier is sufficient to incentivise more sorting of waste and the diversion of bulk compostable wastes from landfill to composting plants. An example cited from Auckland when landfill costs moved from $65/tonne to $95/tonne over a three-year period was for some of the independent wheelie bin collectors to commence sorting waste, particularly construction and demolition waste.
There is a third reason for a waste levy which can be expressed as follows:
- to generate funds to be generally applied to waste management activities (... and perhaps to other things as well)
There is a firmly held view amongst the large waste companies that this is the purpose of the combined Auckland North-West Alliance levy and that once in place the levy system will be used to raise larger sums and/or apply it to less waste minimisation focused activities.
Setting aside the third purpose for discussion below, the first two attracted interesting comments around the quantum of a levy. A view was expressed that if the levy purpose was to change behaviour then a large levy would be required, and in contrast, if it was to collect revenue for waste minimisation alone then it need not be a large impost. Territorial Local Authorities with well-established waste minimisation programmes challenge the latter assertion.
This latter point introduces another consideration, that if it is only a modest sum that is required, less than $5 million for arguments sake, then direct government funding might be easier and more economically efficient than a levy.
It is important to note that the point in the collection-disposal chain at which the levy is collected is very important for the transmission of the price signal, particularly for a smallish sum like $10 per tonne. Set and collected at the landfill or the back door of the transfer station we have seen that it can have an effect to increase sorting and diversion. This would much less be the case if the point of collection was the commercial premises from which the waste was being collected as the generator of the waste is likely to be less ‘price’ sensitive than the waste collector in the author’s experience.
A concluding point arising from the discussion on this subject was a common view held that collecting and using money labeled “for waste minimisation” was an important paired or connected signal. Thus the signal given by the levy is not so much a price signal (at least at the start) but a signal that waste minimisation is being taken seriously and waste-sourced money is being used for this purpose.
5.2 Issues and views around collection of a levy
The great majority of parties interviewed agree that from a ‘narrow’ efficiency point of view collecting a levy by weight of material to be buried at the landfill is the most sensible approach. The landfill itself is the logical place to collect it. The back door of the transfer station (after sorting, if any) could be a suitable proxy if circumstances dictated it. This is the method most commonly used overseas. It is the method used by Christchurch City Council. So why would one use another method? The answer is, when one doesn’t own or control the landfills to which the waste is going.
If one doesn’t own or control a landfill then the only other way to collect a local levy is on waste at source and the only practical way of doing that is to use waste collecting businesses as is proposed by the North-West Alliance councils. A Waste Collectors, Monthly Waste Reporting schedule is proposed to be used for this purpose. A copy of the form is shown in Appendix 3.
This reporting schedule is used by the North-West Alliance’s common waste collection contractor, Onyx Group Ltd for reporting waste volumes. The company collects a relatively narrow range of domestic and recyclable wastes from households and commercial premises in the three council’s areas. Onyx has no other waste collection business in the Auckland area and, perhaps influencing its views on the reporting format, seeks none. It pays the Waitakere City Council waste levy per tonne of material collected (combined waste and recyclables) within that city’s boundaries.
Onyx advises that the reporting, and particularly the need to collect separate information city by city, is an additional cost. The CEO observed that the systems needed for a waste business with a more diverse source of wastes and covering a larger geographic spread of cities would be more demanding and costly. He observed that the cost grows with the accuracy sought.
The waste collectors’ return is far from simple as it requires wastes to be categorised by source council location. Its complexity arises from the need to identify the source of the waste in order to repatriate the levy to the correct Territorial Local Authority. The complexity can be moderated by collecting only a narrow range of waste types and in a restricted area as is the case with Onyx. An additional role for the form is to gather information on waste sources and volumes to enable targeted management and minimisation programmes to be developed. This form has been one of the triggers for the major waste companies seeking a judicial review
The North-West Alliance reporting requirement poses significant practical challenges for all collectors with a business that cross Territorial Local Authority boundaries, like those in the greater Auckland area. The addition to the scheme of other Territorial Local Authorities will compound the problem. In its present form it is likely to lead to imprecise data recording. Indeed in small margin businesses with a work force subject to performance pressures, in a sense it invites it.
One possibility raised was that theoretically at least, a waste levy could be collected by Territorial Local Authorities through the consents process under the Resource Management Act 1991. Putting the requisite conditions on landfill consents seems at first glance to be generally within the purpose of the Act and could be introduced by National Policy Statement or National Environmental Standard.
5.3 Issues and views around a regional levy
The key issues raised concerning a regional levy are, the control of the money raised (see section 5.5), the challenges of establishing straight forward and satisfactory administrative arrangements, establishing the ‘waste region’, and the replication of administrative costs if several regional schemes are set up.
The need for a levy gathering area from which waste cannot ‘flee’ and avoid payment is a fundamental design criterion for a regional levy. It leads to the consideration of either a New Zealand wide (national) levy or a region wide levy. The possibility of a regional levy arises from a number of directions and considerations as follows:
- the Auckland North-West Alliance is soliciting support from Auckland and one Waikato Territorial Local Authority to join them in their scheme
- the Canterbury region operates a successful co-operative arrangement based on the Kate Valley landfill.
The spider web of bulk waste trucking routes within, between and across territorial and regional council boundaries in the upper North Island in search of lower cost or own company landfills is by now legend. Northland’s wastes go to Auckland, Bay of Plenty wastes go to Waikato, as does some of Auckland’s. Gisborne’s waste went to Hawkes Bay for a while and now goes to Paeroa, and so it goes on. There are a few exceptions. There is a similar story in Canterbury, and elsewhere. In some parts of the country, such as the lower North Island where landfill numbers are greater (relative to volumes of waste) and many more are in local authority ownership, the spider webs are less complex.
Waste movements are dictated by commercial arrangements, influenced by trucking times, and unaffected by local authority boundaries. The message is that waste collection and disposal arrangements and behaviours define their own region and they do not coincide with single or groups of regional council boundaries. They are also likely to change over time as older landfills close and new ones open.
But regional levies could work. The majority of people involved (waste companies and Territorial Local Authorities) can conceive of a boundary to an upper North Island waste region across which leakage would be minimal and/or could be managed. It would run from below the Bay of Plenty to the King Country Taranaki border (more or less). Within this ‘mega-region’ a system involving a waste levy collected at the landfill on waste originating in the area could work.
The champions of the North-West Alliance system are ‘nudging’ their collective approach in that direction by trying to win the support of Waikato District Council. Some individuals in that group acknowledge that extending their scheme would require compromise on the by-law, and if necessary a changed focus to disposal and away from collection.
Other parts of the country with lower population densities and less competitive waste markets also lend themselves to regional arrangements, and to ones more closely aligned with current regional administrative boundaries.
Regional approaches, even if they are not bound by regional council boundaries could benefit from the administrative experience, networks and infrastructure of regional councils. Might they have a role? Senior policy staff in the three contacted for this work indicate that waste management is not on the agenda at political or officials level at present.
Regional councils have no significant current role in waste administration and nor do they seek one. Territorial Local Authorities don’t seek their involvement.
5.4 Issues and views around a national levy
Questions put to the interviewees around this issue were prefaced with a proposition that a national levy could take a number of forms. Thus, while it could be New Zealand wide and be established through legislation it could have devolved functions and depending on locational particulars it could be locally or perhaps regionally managed. The purpose was to move people’s ideas away from central government control and all the baggage that goes with that territory.
The issues arising around a national waste levy are control, control and control.
Simply stated, the large industry players are concerned (and in some cases deeply suspicious) that a local government operated system will follow local political and administrative agendas to use the money for a wider range of waste related and even non-waste activities and to garner more money over time. Industry believes that the initial design and subsequent management of a national system is more likely to be professionally developed and narrowly prescribed.
Local government views on a national system cover a wider scope. The North-West Alliance has a significant investment of time and effort in their system and are very committed to pursuing it. They are opposed to a national levy because they believe it will deliver them less money and there may be restrictions on its use. They argue, not very convincingly, that they need local collection of the money to achieve local and regional solutions. Other Auckland Territorial Local Authorities are reported to be interested in and/or committed to the concept. Whether this is because of its intrinsic merit or because there is no alternative (national levy) is unknown.
The Christchurch interviewees strongly prefer their existing arrangements which they find satisfactory and on that basis do not want a national levy to replace it. They can however see a role for a national levy ‘laid over’ the existing arrangements. The Hawkes Bay interviewees see a national levy giving their waste minimisation initiatives a boost.
5.5 Issues and views around the distribution of a levy
If the purpose of the waste levy is to penalise the polluter and/or to generate funds for waste minimisation use in a local area, then the price signal must flow back to the area the waste is generated in.
This is the issue around which views are most strongly held. There is a small set of common views and a second group widely at variance. Every person spoken to firmly believed that none, or at best a token amount, of the money raised through a waste levy should end up in the Consolidated Fund. The New South Wales experience referred to above is one, but only one of the factors influencing this. It is seen more as a simple matter of equity. There was a (grudging) acceptance that a small portion might be justifiably assigned to administrative costs.
There was wide agreement that the money should be repatriated to the local authorities. A population-based formula was accepted as reasonable, notwithstanding it would tend to penalise Territorial Local Authorities with industries generating large waste volumes in favour of others with little or no waste generating industry.
There was recognition of the value of some money being available for national initiatives, i.e. with a nationwide benefit, but not, or not necessarily, spent by central government.
The strongest views were held around what the money should be spent on, however raised, and in whomever’s hands. Listed below are the types of use with comments:
- new initiatives funding – a contestable fund for researching or kick-starting new initiatives had wide support
- kerbside and other recycle collection schemes – was widely supported but waste companies drew a firm line beyond the collection
- transfer station activities such as sorting, storing, preparing for sale – was supported by Territorial Local Authorities but opposed by waste companies
- litter control, collection of abandoned cars, monitoring / policing flytipping – were seen as legitimate uses of the money by most but not all of Territorial Local Authorities but not by the waste companies
- council sponsored or supported community initiatives like worm farms and local composing – were not supported by the waste companies although they did support ‘education’.
Another possible use for the levy income suggested was funding the monitoring or reclamation of abandoned or historic landfill.
And then there is the question of the management of the fund. The Canterbury Waste Sub-committee (of the Canterbury Joint Standing Committee) is a model that works well in that region. One of the reasons for this, it is asserted, is that at its formation, key waste management powers and responsibilities of Territorial Local Authorities were ‘ceded’ to it and it is not subject to politically led changes. Political involvement is maintained in a high-level governance role.
A governance model recently discussed at an officials level by the North-West Alliance around the question of additional Territorial Local Authority ‘members’ is a council controlled organisation with equal representation by politicians on a board. There are precedents for this equal and political representation which have struggled with the ‘stronger voice’ and ‘greater authority’ of Manukau City and Auckland City on these forums because of their larger populations.
5.6 Other issues
There are two external issues that could potentially influence the decisions taken and the opportunities for change around this issue.
The Green Party has a Waste Minimisation Bill in the ballot for introduction as a Private Members Bill. It is in the name of Nandor Tanczos. The Bill covers the establishment of a National Waste Minimisation Authority, local authority responsibilities as Waste Control Authorities, bans on materials to landfills, a national waste disposal levy which would fund waste minimisation activities, extended producer responsibility and other related activities. It covers all the institutional and operational aspects related to setting up and operating a national waste levy scheme.
The Parliamentary Commissioner for the Environment is just completing a study of the use of economic instruments for management as one of its major cases. The report of this study is due to be presented to Parliament in April. It is understood to report in favour of the use of economic instruments in at least the management of waste.
One organisation favoured a targeted levy system on particular waste, and outright bans on others.
