Hogan's U-turn

MARKETS DISLIKE uncertainty. As do consumers

MARKETS DISLIKE uncertainty. As do consumers. The waste collection market is no different, nor are its customers or indeed its service providers. Last year, the Fine Gael-Labour Coalition in its programme for government promised to introduce competitive tendering for the provision of local waste collection. Eighteen months on Minister for the Environment Phil Hogan has changed his mind – and yesterday the minds of Cabinet colleagues. They have agreed to abandon proposals to regulate waste collection under which local authorities and private firms would bid for a franchise to collect waste in each area. Instead the current system, allowing unrestricted competition between bin collectors – will be retained.

In recent years one benefit of open competition, which allows any licensed private operator to offer a waste collection service to homes, has been a sharp drop in domestic waste charges. The vigorous free market left local authorities struggling and failing to compete on price. As a result, most authorities have quit household waste collection altogether and the market is now dominated by private operators who strongly oppose the kind of regulation, via competitive tendering, that the Government envisaged in its joint programme.

In 2007, when Dublin City Council (DCC) sought to introduce a similar measure, two private firms (Panda and Greenstar) succeeded in a High Court challenge. That win has encouraged private operators to believe that a future legal challenge to the Government’s competitive tendering proposal could also succeed, a prospect that may explain Mr Hogan’s belated rethink. What remains less clear is the fate of the Poolbeg incinerator, which the city council has been attempting to build for over a decade. Construction at the site finally began in December 2009, but was suspended six months later.

Work has yet to resume on a project that has so far cost an estimated €80 million in public funds. Meanwhile negotiations with US developer Covanta continue. DCC has maintained Poolbeg would not be viable unless the council could control all the waste collected by private operators in the Dublin region, and could also decide how that waste should be disposed of – namely, to which facility it should be sent. That helps to explain the city council’s decision to appeal the High Court decision, which rejected its plans to introduce competitive tendering proposals. The waste collection market remains beset by uncertainty, which Mr Hogan’s policy rethink may not do much to influence or change.