Galway city joins other councils in privatising refuse service
By Martina Nee
With a dwindling customer base and a deficit of €1.6 million Galway City Council has taken the decision that so many other local authorities have taken and today started the bidding process to find a private operator to take over the collection of household waste.
It has held out for a long time, tried many different options, but Galway City Council has finally thrown in the towel and will by November 18 no longer be in the refuse collection business. It is not the only one making this difficult decision as the only other local authority to currently provide a refuse service, Waterford County Council, will also face a similar dilemma.
Explaining his decision, city manager Brendan McGrath told councillors at Monday night’s meeting that there has been “significant reform and change in local government since 2008” and the Department of the Environment is “focusing on shared services and scaling down on non-core local authority services”. According to Mr McGrath, the council has been “trying to deliver all the services” with a reduced staffing level, which since 2008 has dropped by just under 20 per cent. Then in June 2013, a refuse review report was presented to the city manager and found it was not “financially sustainable for the council to continue to provide a full range of household services”. This is similar to what has happened elsewhere, such as Cork and Dublin, said Mr McGrath, who assured councillors that the proposal does not envisage job losses or redundancies among the staff in the refuse service who will instead be re-trained and re-deployed elsewhere.
“The process is to organise a managed exit from the refuse service, protect finances, and those in receipt of the waivers from the council. There has been a continuous erosion of customers, from 21,000 to 10,500, 2,400 of this are in receipt of waivers. It is a cut-throat market which is putting pressure on the council service. The number of paying customers has fallen off a cliff in 2013, especially since the advent of a new player in the market in February. Last year, there was a drop of 2,200 customers. By leaving the market now there will be some value in the asset that is attractive, save the waivers, and ringfence payments for customers,” said Mr McGrath, who added that the council is not required to provide this service because there are providers giving a high quality service.
Director of services, Joe O’Neill further explained that government policy focuses on local authorities enforcing and regulating refuse services and that “reality is, there are momre competitors since 2006”.
“There is a very wide gap between revenue and expenditure and this is increasing. Since 2010 our expenditure has exceeded our income. We reduced expenditure but we were still not able to bridge the gap. We had to come to this conclusion as we couldn’t see a way of making it viable. It was a choice of carrying on with few customers and rising deficit and be forced to stop in 12 months time. Or, have a transition where we were not just going to abandon our customers,” said Mr O’Neill.
Referring to Galway City Council’s high recycling rate, senior engineer Kevin Swift said: “We led the way, demonstrated how the service can be delivered and the market stood up and watched that. Our time has come and gone. The next decade will be all about prevention and minimisation. This is the natural evolution of the waste management path and councils need to change the focus. For me it’s a sad day, we played the game and did it well. We can now look at the options it presents, on consolidating efforts on litter management and cleansing the city, using the resources that get freed up. Look to the future and consolidate services, that’s the silver lining.”
A report shows that when waiver, loan, and central management costs were included the gross deficit between income and expenditure rose to circa €1.6 million. It referred to the amount of effort that was made in retaining the service in a competitive market. A number of measures were implemented prior to 2013 including reduction in the number of refuse crews, negotiated reductions in the costs of disposing of collected waste, adjustments to the operation of the waiver scheme, and promotion of the service through GCC website and local media. The annual charge was also reduced from €365 in 2003 to €229 in 2013. However, it is still €54 greater than the lowest rate being offered to households in the city.
The bidding document will contain a schedule of minimum requirements that the succesful bidder must agree to provide for a defined period, including the quality of the service that is to be provided and the pricing. It is understood that existing customers will continue to be serviced at the same time and with the same frequency as is currently the case, unless otherwise agreed with Galway City Council.