To fund the recommended actions in this waste management and minimisation plan (WMMP), the following must be considered:
- alignment with the intent of the Waste Minimisation Act 2008 (WMA) to minimise waste to landfill and raise the cost of disposal to landfill
- affordability and the minimisation of costs to the rates account
- equity and fairness.
Councils have a number of funding systems available for paying for waste services. The primary sources of income for councils are rates funding and user charges on some or all of the resident population. The option recommended in this plan for refuse collection and disposal is disposer-pays – a transparent method with direct correlation between household use of the service and the associated cost.
A secondary revenue source for Auckland Council is commercial waste activities such as operation of the Waitakere Refuse and Recycling Transfer Station, licensing fees, dividends (such as from Whitford Landfill joint venture) and other waste services such as revenue from the Waiheke Transfer Station.
A third source comes from bundling the cost of collection services and using some of the revenue from disposer-pays to offset costs of private-good waste and recycling services, as per section 46 of the WMA, which states:
46 Funding of plans
(1) A territorial authority is not limited to applying strict cost recovery or user pays principles for any particular service, facility, or activity provided by the territorial authority in accordance with its waste management and minimisation plan.
(2) Without limiting subsection (1), a territorial authority may charge fees for a particular service or facility provided by the territorial authority that is higher or lower than required to recover the costs of the service or facility, or provide a service or facility free of charge, if:
(a) it is satisfied that the charge or lack of charge will provide an incentive or disincentive that will promote the objectives of its waste management and minimisation plan; and
(b) the plan provides for charges to be set in this manner.
A fourth source is funding from the government waste levy. For 2012/13 the levy funds available to Auckland Council are anticipated to be about $4.2 million. This comes from the portion (50 per cent) of the government waste levy funding pool allocated to local authorities on a population basis. Central government stipulates that this money is to be spent on waste minimisation activities in accordance with WMMPs. These activities have been clearly identified in this plan.
The council plans to spend approximately $1.2 million of the waste levy income annually on additional waste minimisation education and promotion49 over the first four years of the plan – a significant increase on previous expenditure levels. The short-term spike is expected to diminish as waste reduction outcomes are achieved. This portion of the levy money will then be redirected into other waste minimisation activities50.
The plan also indicates that $1.6 million will be spent every year on offsetting the cost of introducing a new enhanced kerbside recycling service for schools, an extended WasteWise schools’ programme and a community grants scheme. The remaining $1.4 million waste levy funding will be spent on ongoing implementation and strategic planning of the new initiatives adopted in the WMMP. A portion of it will be accumulated to offset the capital costs for setting up an organics processing facility.
Auckland Council could also apply for funding from the contestable portion (50 per cent less Ministry for the Environment (MfE) administration costs) of the waste levy funding pool (the Waste Minimisation Fund) to help establish an organic waste collection and processing facility, in partnership with the waste industry. This will be explored when decisions on the final suite of services are made. Likewise, an application to match funding in the proposed community grants scheme ($500,000) could be investigated.
When discussing the funding of publicly provided services, issues around public-good, private-good and disposer-pays need to be considered. ‘Public-good’, used in the context of waste services, generally refers to services provided for the public in order to meet environmental policies and standards. These services – which benefit the whole community – cannot normally be linked to specific individuals who use the service, so the cost is usually met through general rates.
‘Private-good’ often refers to services that meet environmental policies and standards that are linked to specific individuals – kerbside recycling services, for example. In most cases costs are met through general rates or subsidised by other waste services or the government waste levy. If disposer-pays for refuse is chosen, some of the private-good costs can be legitimately met through a small surcharge, reflecting both the community and individual benefit derived from services.
Disposer-pays aligns closely with central government’s policy to provide financial disincentives in order to minimise waste sent to landfill. As a consequence there are areas where disposer-pays is the most appropriate funding approach, such as for refuse disposal collections taken to landfill. Additionally, the legislation allows local government to subsidise other private-good services through any disposer-pays services surpluses.
Charging methods for waste services have varied considerably across the region. With regard to kerbside refuse services, some ratepayers currently pay directly for the refuse they send to landfill by purchasing bags or stickers (disposer-pays). Others pay indirectly through their rates bill. Kerbside recycling collections, on the other hand, are generally paid for by rates or by revenue from other waste services operations.
Because charging mechanisms and services both vary, it is hard to give a simple cost comparison across former councils. Each had its own mix of receptacle size, collection frequency, charging mechanisms and percentage of private sector services. The mix of streamlined services and consistent funding mechanisms proposed in this plan are intended to reduce waste to landfill while delivering services at the lowest possible cost to the ratepayer.
In view of this, the net cost (excluding growth and inflation) of the ultimate package of measures to reduce waste to landfill including the new measures, is not to exceed the net rates requirement for 2014/2015, bearing in mind that all households will have the potential to substantially reduce the disposer-pays component of their waste if they utilise the full suite of services.