COMHAIRLE CONTAE ÁTHA CLIATH THEAS
SOUTH DUBLIN COUNTY COUNCIL

MEETING OF SOUTH DUBLIN COUNTY COUNCIL

Monday, March 11, 2019

MOTION NO. 1

MOTION: Councillor M. Ward

Mayors Business

That South Dublin Co. Council notes the findings of the recent report by the Consumer and Competition Protection Commission’s report into the domestic waste collection service, namely, that Ireland is the only EU member that has side-by-side competition in the domestic waste collection market and that 23% of households have no domestic waste collection service.

 The council also notes the alarming rise in illegal dumping and the lack of a waiver system in place for lower income households.

The council therefore calls upon the CEO to establish a review of the current tendering process with a view to:ending side-by-side competition and  furthermore calls upon the CEO to enter into discussions with the other Dublin County and City councils with a view to re-entering the domestic waste collection service

REPORT:

The Competition and Consumer Protection Commission (CCPC) in September 2018 published its report assessing the household waste collection market. The CCPC’s report examines the market from a competition, consumer protection and regulatory perspective. The report examines the current structure and the evolution of the waste collection market, the economic theory behind utility markets, and compares Ireland’s market against that of other European countries. It makes recommendations as to the steps that could be taken to ensure that the market delivers the best outcomes for the State, consumers and operators.

The CCPC’s report examined the current market structure, which is known as side-by-side competition. This type of model means that, subject to licensing, waste operators can offer their services in any location and so there may be more than one operator in a given area. This structure also means that price and service levels for the collection of waste from households are determined by private operators. In this context, Ireland’s waste collection market is atypical among almost all countries in Europe. Usually, competition brings better outcomes for consumers, businesses and the economy. The existence of multiple suppliers drives businesses to compete on price, customer service or products, and consumers have the power to influence by changing provider. However, in a natural monopoly market it is more cost effective and efficient for one firm to supply the market than to have a number of suppliers. The CCPC’s analysis has found that the household waste collection market exhibits characteristics of a natural monopoly, including strong local economies of density and scale, high fixed costs and a large cost advantage for a single operator. In theory, side-by-side competition should allow for multiple suppliers and consumer choice. However, in reality, the domestic waste collection market in Ireland is highly concentrated and becoming increasingly so. As a result consumers have little or no power to influence the behaviour of operators in this market.

The report states that there are generally two types of solutions to this type of situation: (1) more operators and increased competition, or (2) economic regulation. Given the characteristics of the waste collection market, we will likely see less competition rather than more in future. Economic regulation is therefore necessary.

In developing it’s recommendations, the CCPC looked to the experiences of other European countries. In the EU countries which were surveyed the State has maintained a high level of control, either by managing the collection of waste directly or by contracting it by competitive tender to the private sector. In Ireland, although there are multiple bodies tasked with regulation and enforcement activity in this sector, regulation generally relates to environmental policy. The state has few sector-specific economic levers to ensure that its strategic policy on waste collection service for households is delivered and that environmental goals are achieved. Introducing economic regulation would remedy this, and would also allow for standards of consumer protection to be equal to those of other utilities. While not underestimating the challenge of this change to the market as it is currently structured, the CCPC believes that this would allow the market to work better for all parties into the future.

The CCPC has considered the manner in which the sector can be best managed and has made a number of recommendations for policymakers to consider in this regard. CCPC Recommendations

• Recommendation: Establish an economic regulator for household waste collection, with consideration to be given to the function of the regulator in relation to economic licensing, data collection and analysis, market design and consumer protection.  
• Recommendation: A review is undertaken of the Government’s 2012 policy document, “A Resource Opportunity: Waste Management Policy in Ireland”. The CCPC suggests that this review could be usefully informed by the evidence collected in the course of this study and that the review be conducted in the context of the recommendation to establish an economic regulator.
• Recommendation: Ensure that all of the State’s resources are co-ordinated to deliver optimal outcomes for this market. The introduction of a new regulatory regime should also have a central objective to use these existing bodies in a manner that creates efficiencies, wherever possible. Consideration should also be given to utilising and extending existing structures to create a new regulatory regime.

It is clear that the recommendations which are contained in the CCPC report need to be examined and acted upon at a national level, if these are deemed to be appropriate and necessary. These matters cannot be influenced or acted upon in isolation by the local authority sector which has no power to introduce legislation in the area, amend existing legislation, establish regulation or review the 2012 national policy on waste.  This Council along with other local authorities and the regional waste offices will play whatever part is required of them once these matters are being examined and addressed nationally. 

It must be remembered that South Dublin County Council exited the domestic waste collection market in 2011 at a time when it was losing customers to the private sector in alarming numbers (15,000 customers lost in a 9 month period) and at which time the deficit between income from the service and the cost to operate it stood at €14m per annum.  It will not be possible for this Council to re-enter the market in such circumstances.