Joint Committee on Communications, Climate Action and Environment debate -
Tuesday, 8 May 2018

Waste Charges: Department of Communications, Climate Action and Environment

Chairman

I remind members to turn off their mobile phones. We have received no apologies. We will now invite our witnesses in.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they give to the committee. However, if they are directed by the Chairman to cease giving evidence in relation to a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. I wish to advise witnesses that any submission or opening statement made to the committee will be published on the committee website after this meeting.

Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the Houses, or an official either by name, or entity by name or in such a way as to make him or her or it identifiable.

I advise witnesses that any submission or opening statement they make to the committee will be published to the committee website after this meeting.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person or body outside the Houses or an official, either by name or in such a way as to make him or her identifiable.

I welcome our witnesses to the meeting today to engage with the joint committee on waste collection charges. I propose that the main witnesses will speak for no more than five minutes and if they wish to share their speaking time they may indicate that to me. That will be followed by a questions and answers sessions with our members.

Mr. Frank Conway, chairman of the household waste collection price monitoring unit, is joined by Mr. Kevin O'Donoghue, principal officer of the waste policy and resources efficiency division in the Department of Communications, Climate Action and Environment. I invite Mr. Conway to make his opening statement.

Mr. Frank Conway

The price monitoring group was established by the Minister for Communications, Climate Action and Environment, Deputy Denis Naughten. The purpose of the group is to monitor the ongoing cost of residential waste collection to homeowners across Ireland as the flat-rate structure is being phased out in line with Government waste policy to incentivise the prevention and segregation of household waste. The most recent report was in April 2018 in respect of data gathered in March. The reports monitor 26 service providers, which is made up of 19 individual companies with several of those being monitored in more than one area. Those companies made 39 different service offerings available in March 2018, down from 41 in February and from 45 in the first report of the price monitoring group in December.

There are nine types of price models on the market. Examples of price models include: service charge plus per kilogram weight charge; E-tag; service charge plus charge per lift per bin plus per kilogram excess charge; and flat rate.

With regard to green bin charges, it is widely acknowledged that the decision by China to restrict its intake of recycled waste has resulted in the cost of recycling increasing worldwide as more companies on an international scale jostle for access to a reduced number of outlets. Some providers have already informed their customers they will be either increasing or introducing charges for recyclate from April. This is not a new concept. Since we began gathering data, various service offerings contained visible fees for recyclate, as can be seen in the data analysis published by the price monitoring group.

With regard to consistent disclosure of prices, an issue of concern to the price monitoring group has been the ongoing difficulty obtaining clear price information over the phone with prices having to be confirmed online in a number of instances. I am aware this information is not always available online and that not everyone has Internet access. In our last market comment the group called on waste management companies to provide better training for staff answering calls to ensure pricing data is clear, complete and consistent and provided quickly and efficiently.

The group has considered seven months of data to date. While fluctuations in prices and service offerings have been observed, the overall trend is relative price stability. The most popular service offering now is the service charge including weight allowance plus per kilogram charge for excess above allowance. The availability of this price model has increased from seven offerings in the first round of data collection to 16 offerings in the most recent round of data collection, down slightly from a peak of 18 in series six, which is the previous month.

The group comprises: representatives from the waste policy and resource efficiency division of the Department of Communications, Climate Action and Environment; an economist from the Department of Communications, Climate Action and Environment; a statistician from the Central Statistics Office; Shelfwatch, an independent price monitoring group; and me. I am an independent consumer expert and chair of the group. To date, the price monitoring group has met on eight occasions, on 13 September 2017, 11 October 2017, 14 November 2017, 12 December 2017, 9 January 2018, 13 February 2018, 13 March 2018 and 10 April 2018. I have also submitted copies of the reports and the data to the committee.

Chairman

Does Mr. O'Donoghue want to add anything?

Mr. Kevin O'Donoghue

I have nothing to add.

Chairman

I will start with my question and then bring in Deputy Stanley.

As Mr. Conway acknowledged, there are issues for customers with regard to the transparency of prices and being able to compare prices from different companies. Customers are asked to go online and if one does not have Internet access or is older and not comfortable using the Internet, serious issues arise as a result of that. Why is it not mandatory for waste collection companies to have transparent pricing models? Does Mr. Conway feel the Department has adequate powers to ensure the customer is getting value for money and can see the price difference?

I will bring in a number of my colleagues so the witnesses might take note of the questions.

Deputy Brian Stanley

I welcome the opportunity to speak to Mr. Conway and Mr. O'Donoghue about the price monitoring group. We have been waiting for nearly a year to look at what is happening in the waste collection market. I have read the report in detail and it is clear there is very little transparency in household waste collection and there is almost no regulation of it. It looks to me like a bit of a free-for-all. I note there were 41 different offerings which is now down to 39. That is hugely complex. If one compares it to the gas and electricity market, one looks at one's bill and can see the exact breakdown of how it is made up, what components are in it and how it is calculated. Why is that not being considered?

The other question I had is about the model. The model we are using is very complex. If one looks at the issues raised about the reduction of 41 offers to 39, with nine different models, it shows how difficult it is. This side-by-side competition is unique in Europe. In the housing estate I live on in Portlaoise, there are three refuse collection companies that come into the small part of the estate where I live and that does not make sense. It is not regulated to any great extent and there is a history of skews in the market and various different things happening.

It is not just about the competition; it is about the way it is structured. Has the group looked at side-by-side competition, where a local authority, for example, Dublin City Council, Galway County Council or Laois County Council, would offer a three-year franchise to companies and that companies would bid for it and the council would get the best deal? There is a very clear similarity in how the companies are operating in terms of the pricing structure. There is very little difference. They all tend to move at the same time. It appears there is a carve-up of areas in some cases. In some estates there are three, four or five companies operating. In larger areas, it appears there has been a carve-up. There may not have been. A way of getting a better outcome for the householder might be through a franchise.

My first question was on transparency and my second one was on the model we use. My third question is on the bin collection. I have raised it with the Minister. The brown composting bin is not available to all customers. Some of the collectors are not providing it. I do not know how much of an examination has been done of that. The purpose of the price monitoring group was not strictly to look at this issue but the Department needs to take it on board. Collection companies are being licensed through the lead authority, which is Offaly County Council. It is the lead authority in issuing licences for refuse collection. It needs to be looked at. If a refuse collection company is getting a licence, it should provide a compost bin, which in most counties is brown. It is brown where I live. It is not available in some places. Parts of the town of Portlaoise do not have brown bins at the moment. Has the group looked at that?

Is there resale of waste? For collectors in the North at one stage there was a resale value on it. Local authorities were getting back some funding from it.

Deputy James Lawless

I have a number of questions for Mr. Conway and Mr. O'Donoghue. I thank them both for attending.

I note in the opening statement the Department mentioned the change in China's policy in terms of not accepting recycling to the same extent it had previously, and the knock-on effect to costs for consumers and for the waste sector. On a related note, since that development I understand there have been changes to what materials are allowed in what bin and there has been some confusion about that among the public. Perhaps that is outside of the officials' scope. If it is in their scope, to what extent has there been consumer education providing clarity? Have the operators exploited that in any sense? There was fear at the outset that consumers may be fined, etc., for putting the wrong item in the wrong bin in good faith. Has there been any evidence of that? Is the Department proactive in this regard? Is part of its role to monitor that and help educate the consumer?

Looking in general at the statement and supplementary documentation, it reminds me of the health insurance sector. That might appear an odd comparison. I am not suggesting that waste is on the same level on one's health but the health insurance sector has a proliferation of products from multiple providers and the HIA has a role in drawing up a matrix to inform and educate the public as to how it can navigate the offerings. Naturally, it was found that it was difficult for the providers to be objective about their own product offerings and the HIA took on the role of intermediary in advising on that. I would say it is a more complex market, although looking at the appendices it is fairly complex here as well.

I commend the officials on drawing up the documentation. Is the appendix publicly available? Is there an awareness of that? If I was changing my bin service in the morning, would I be able to go online to a particular portal to look at the different options out there along the lines of the detail provided to the committee today? If that was an option, it would be useful.

Chairman

I thank the officials for taking note of the questions. I will come back to them after Deputy Ryan.

Deputy Eamon Ryan

What is the intent in publishing the findings of the price monitoring group? I ask that on the basis that on my road we only have one collector, Panda. There is not a choice. Even if there was, it does not seem that it would make any sense to have two bin lorries going down the one street due to the inefficiencies involved. What is the point of monitoring? What powers has the Department if an operator is out of line or seen to be gouging the price from the consumer?

What monitoring, if any, does the Department conduct of the wholesale price in the market for incineration, landfill and-or recycling? Does the Department look at some of those costs which, I presume, are the main variables in what would determine the consumer price? It is interesting they referred to the current difficulty with the Chinese decision not to accept certain grades of recyclable plastic. Has the Department any figures on its price implications for the recycling market? Indeed, I understand that in the paper market there is for whatever reason almost no price for paper recycling so that it is a cost rather than a revenue stream for any company. Does the Department conduct any research or analysis on those elements in the market or does it have the latest figures for the incineration cost, the landfill cost and the recycling cost or revenue to give us a sense of whether those prices are having an effect on where waste is going?

Chairman

There were many questions. The officials might want to split the questions between them in any order they wish. I do not mind whoever wants to start.

Mr. Frank Conway

I will take Deputy Stanley's questions.

Mr. Kevin O'Donoghue

The Chair had one question initially in terms of manager requirement on publishing prices. Mr. Conway might go through the role of the group and why it was set up the way it was.

Mr. Frank Conway

To answer Deputy Stanley's first set of questions, the specifics of the role of the group when it was set up were quite tight. For example, the remit of the group is to monitor the market. Twelve months ago, nobody understood what prices were being charged. In the interim, it was to establish whether or not companies all had flat-rate charges, for example. What we found out in the interim is that there is a range of different pricing models. This is to inform Government. Government, at the end of the day, is getting the information. We also make it available to consumers, which we will come on to in a minute. That also came up in one of the questions.

Our remit is to ensure that we are publishing the information. That information can be used. Whether or not it is, is a policy decision down the line. We do not have any policy powers. We do not have enforcement powers, for example, but we are informing the Department and the Government of the prices out there and whether or not those prices have shifted over the past six months.

There are a couple of bits of analysis we have looked at. One piece which I have looked at over the past couple of days is about price. For example, on a month-by-month basis, we are not finding that prices have gone up. Equally, over the four months, we also have not found that prices have shifted. That is a piece of work we are doing on an ongoing basis.

We have two meetings and two more reports to issue. Those reports will come out, one next week and one the following month. That will be the end of the group to inform whether or not prices have changed.

The central issue was whether or not there was gouging in the market. We are not finding any evidence of that right now. We are finding that prices have remained quite stable. In fact, what we have found is that even where there were green bin charges in place last December, those prices have not shifted. I expect we will begin seeing new prices coming in because some companies have announced that they would be introducing those fees from April and May onwards.

Mr. Kevin O'Donoghue

There were a variety of questions and I will do my best to cover off all of them. If there are any I miss at the end, I would be happy to take them again. I can only apologise if I miss them as we are going through.

The model is complex. Deputy Stanley raised that and that is true. The role of the price monitoring group is to try to explain that to consumers. The market here was always complex but it was not widely understood. The price monitoring group has played a good role in trying to educate consumers. That is why the reports of the group are published online as well. That is why the Department's website has them - to try to let consumers see what is happening within the market.

The group is due to finish in June of this year. It is a matter for the Minister to determine whether that should be extended. In a situation where the idea of phasing out flat fees will run until October, there is probably merit in the price monitoring group continuing its work so that it would do a sweep in November, pick up the last of the charging structures from October and report in December, but that is a call for the Minister. I would be more than happy to take back the views of the committee to the Minister, if it felt that was of value.

Competition for the market certainly has been looked at previously. On the decision last year to set up the price monitoring group and to ask the CCPC to do a review of the waste market, the idea is that both of those would feed into any future decisions in relation to the market. The CCPC report is due mid-year. They are talking about that being done in July. At that point, we will have the report from the CCPC and a year's worth of reports from the price monitoring group, and it is then that future decisions on the market will be taken.

Deputy Stanley quite rightly stated that the brown bin is not available to all customers. The current regulation stipulates that it is for agglomerations of greater than 500 and the waste operators have to roll it out to anything greater than that. The Department would like to see that being reduced over time. Even the compost sector itself has concerns about a universal roll-out because one-off housing or difficult areas to reach within the country will push up the cost of the brown bin which is not what we are trying to do.

Deputy Brian Stanley

There is a housing estate in Portlaoise which does not have it.

Mr. Kevin O'Donoghue

If that housing is within an agglomeration of 500, then that is a matter that could be taken up.

Deputy Brian Stanley

There is a population of 23,000, according to the most recent census.

Mr. Kevin O'Donoghue

I would have no problem in taking that up then. Certainly, that is an enforcement issue that we can take up.

The rule, through the national waste collection permit office, that the Deputy referenced in terms of permit conditions, is that the operator must roll it out to an agglomeration greater than 500. If the agglomeration is of that size and the brown bin is not rolled out, that is something we can certainly take up.

As for whether waste has a resale value, most of it at this point is negative. It costs to move it. In November last, the Minister announced the national recycling list. It is the same materials go into the so-called "green" recycling bin no matter where one lives in the country. That has had an effect in that we were always hearing concerns from those managing a parent's bin or whatever where one operator would allow different materials into the bin than another. To simplify the entire process, it is now a national recycling list. Recyclinglistireland.ie has the list. It is the same materials that go into the bin right throughout the country. Some of those are higher value materials, such as bottles and aluminium cans, that may still have an outlet but much of the material that the Chinese market is closed to has a zero or negative value at this point and it is costing operators to move that material on.

I have covered the issue of consumer confusion. We also have a recycling ambassadors programme as part of the education and awareness. We have 650 of those taking place throughout the country. We hope to do an outreach to 15,000 people. That programme is starting to pay dividends in terms of people's understanding of what goes into what bin. On the fines issue, it is very minor at present in terms of the companies that have tried to do this. They are looking at installing cameras on the back of the lifts so that as the bin is tipped one can see which household is doing it. However, it is an education issue to try to make people aware that contaminating material in the green bin means the entire load is useless. We must get away from the position where there is still 36% contamination in parts of the country. That cannot continue. The markets are very tight for moving these materials on and anything we can do to help consumers increase their awareness of that is where our focus will be.

Frank Conway will comment on the appendices.

Mr. Frank Conway

All the information we have put out to date is publicly available. We do it in a couple of ways. We put the information out through the media, for example, to make people aware that they can access the information. We issue a comment on the report itself and we keep it as simplified as possible. We identify where prices have gone up. In odd cases prices may have gone down but more often than not we are seeing shifts upwards in pricing. The second way is that we provide all of the data. I can go through it line by line. When we started this reporting process we wanted to ensure that consumers could access the information, compare it and make a decision on it. The question always is about the homeowner who might be looking at pricing down in Kerry, for example, to refer to the HIA website example. The provider might not be available in that market but the homeowner can see what is being charged down there. Broadly, what we are seeking to do is to make the Government and key decision makers aware that we are looking at the pricing to ensure gouging is not taking place and to ensure that the consumer can access information both from a data perspective and from a comment perspective.

Mr. Kevin O'Donoghue

I will respond to the last few questions relating to the market, incineration, landfill and recycling. The price monitoring group does not look at those prices. It is looking at the prices waste operators are charging consumers rather than the back end. Regarding the implications of the Chinese decision, the waste market in Ireland has transitioned a great deal over the last while. We were putting 92% of our municipal solid waste in landfill in 1995. That was down to 42% in 2012 and to 21% in 2014. We are going in the right direction and moving away from landfill. The number of landfill sites has reduced from 125 at one point to five commercially accepting waste last year.

The education piece about what goes into what bin is critical in respect of educating the consumer about what happens. It is also important to realise that some of the messaging is a little confused. People were talking for a while about a free green bin, but it was never free. The packaging waste collected by waste operators gets a subvention from Repak. Every tonne of household waste packaging collected yields €65 to the waste collector from Repak. It was always the case that it cost. That is how the green bin was dealt with previously. However, when the material now has a zero or negative value and it is costing operators to move it, something else has to change in that regard. That is important information to try to convey to the general public, to make people aware that it costs to collect and move this material. Somewhere along the way we have to ensure that the materials being collected in that area are as clean and uncontaminated as possible. That will only help the operators as they are trying to move the material on to the next phase.

Deputy Brian Stanley

I have a query about the bill being detailed for the householder to some extent, presumably in terms of the volume. Can there be a detailed breakdown to let citizens and householders - I cannot use the word "consumer" - see exactly what their dry recyclables, the composting part and the non-recyclables are costing? It would be a good thing in terms of incentivising people to try to move them along. It would be a basic breakdown, similar to the electricity bill which gives information on fixed charges. It would be useful if people could get that. I accept what Mr. Conway said about putting the information on websites but there is a huge amount of information there. There are still 39 different offers.

My other question relates to the franchise, which was mentioned briefly. Is the pricing group looking at the franchise model? For example, a local authority, such as Galway City Council or Laois County Council, would go with the franchise model on a two or three-year basis so it could get the best value for householders in its district. It would remove that side-by-side competition and stop three and four lorries racing into some estates. More importantly, it could provide greater price stability. The picture that emerges is very complex, and I am sure the witnesses got a better look at it when doing the report. It is a complex issue on which to produce a report. It was not an easy job. It is a complex, almost chaotic, situation. There are hundreds of moving parts in it. The removal of waste from households is more complicated than it was previously. At one time it all went into the back of one lorry and was brought out to a landfill. It now goes to different places.

I believe the franchise model would simplify it and make everything clearer. Most of the rest of Europe, including the North, uses the franchise model. Is that within the group's remit and has it considered it? Can the group examine it? If the witnesses are reporting back to the committee in November or December, perhaps Mr. O'Donoghue and Mr. Conway could revert to us on that.

Mr. Kevin O'Donoghue

To clarify, the PMG does not look at the franchise model. It is looking at the prices in the market to ensure there is no gouging. The Competition and Consumer Protection Commission, CCPC, is doing a report on the operation of the waste market in Ireland. The model was examined carefully in 2011, which was the last time it was considered in terms of whether it would be introduced here. The Government has committed that it will look at it again once both of the reports are available on the future of the waste collection market here. There is no doubt that it has some attraction, but there are some serious risks and difficulties with a franchise model as well which would have to be considered. That is something that would be looked at once all the data from both sets of reports are in. The Department is open to examining anything that might help us attain the target and move it along.

Deputy Brian Stanley

There are many examples to be seen in northern Europe.

Mr. Kevin O'Donoghue

There are some, but some have had serious difficulty with the Chinese market closing. We do not want to get into a situation where we are making life more difficult. If one is introducing a full franchise model, some areas that currently do not have a waste collector operating there would have one, but at what cost? The franchise model would work very well in a city, perhaps, but the expectation at European level is that some of the costs involved go up as one moves to a lower density population. There is a great deal to be examined. Once we get the report from the CCPC we will look at both it and all the data Mr. Conway has collated from the price monitoring group together.

Chairman

When is the report due from the CCPC?

Mr. Kevin O'Donoghue

I believe it is July. I cannot speak for the CCPC but the last I heard it was July.

Chairman

We will engage after that. I thank both of you for attending the meeting. We will publish the opening statement received from Mr. Conway on the committee's web page. Is that agreed? Agreed.

The joint committee went into private session at 3.38 p.m. and resumed in public session at 3.43 p.m.