Talk about a potential smash for the Canadian taxpayer. Private trash haulers were supposed to save Toronto taxpayers millions through revenue share arrangements with the City of Toronto, but a report shows it could end up costing millions.
To be clear, there are numerous means by which private haulers can make money.
Scott Stinson posted a link to the report in Friday’s Toronto Star: Toronto Report: How to make more money…Make as much money as you can…Revenue share… make as much money as you can…
The latest, and at this point longest, attempt at creating a business model that would send private haulers into areas for trash collection where the City of Toronto does not has not worked out. Instead, the waste is diverted to the city landfill, which is also enormously expensive.
Toronto has $3.5 billion worth of unpaid assessments and fines on its balance sheet, and the Liberal government has announced that there will be an inquiry into how it was incurred.
Such payback mechanisms create a sense of entitlement, since there is always a special interest group that might have noticed it was not done for its benefit. It should be refreshing to see those groups review their waste sector investments and ask whether a government-sanctioned entity might be cheaper.
Government approval of a payback mechanism for government institutions is not new. The Canadian government has been issuing environmental permits since the 1960s. Through extensive processes, most industrial projects are approved within a single action period. This not only creates a sense of entitlement to a job, but creates a sense of entitlement to certain principles.
Which brings us to the private sector.
Most of the talk in city hall about improving efficiency is informed by technology, specifically street maintenance and new models for sorting recyclables.
The actual result is that private waste haulers do not have the time to do the collection side of the business or to deal with the city garbage, the very part of the business that taxpayers actually fund.
The solution is to make waste pick-up a service that is outsourced to private entities, via a free-market incentive-based mechanism in which the ratepayer ultimately bears most of the cost.
This will work if the private entity has the will to compete and meets the demand of cost-savings. It would also work if private haulers decided that all of the other, cheaper parts of the business were good enough, and launched themselves as the sole supplier of the service.
Returning the dump to private business will certainly work if the City of Toronto provides the run-around to a competitor that raises the issue of pricing and costs.
Gregg McCray, a partner at Deloitte, spent five years studying the issue of municipal “payback”. He found a monopoly to be nothing more than a punch line. “It’s painful to watch,” he said in an interview. The private sector was equally repulsed. Private private sector analysts spent a lot of time walking the city council through the economics of waste aggregation and ducking the issue of losing business.
The real solution is that of the private sector, but it requires the development of the ability to introduce competition into a public service that has been under complete government control.
The real problem is simply lack of imagination in government departments.