Auckland Ratepayers Alliance

PO Box 133 099, Eastridge, Auckland 1146

Phone: (09) 2815 172
Email: enquiries@ratepayers.nz

RATEPAYER BRIEFING
To:

Rodney and Albany Ratepayers

Date:

20 May 2016

Re:
Higher waste costs in Rodney and Albany wards


EXECUTIVE SUMMARY

The Auckland Ratepayers Alliance is a group of concerned citizens and organisations that want an end to
Auckland Council's persistent rate hikes and culture of wasteful spending. Weve prepared this Briefing
Paper to address members concern over the increasing costs of putting out your rubbish.

In 2012 the Councils Waste Management and Minimisation Plan (WMMP) proposed new standardised
rubbish and recycling collection services provided by the Council across all of Auckland. It promised:
over the long term the average ratepayer/household will be no worse off financially and will enjoy
more services
Auckland Council should have known better. Replacing efficient and competitive private sector services with
local government services accompanied by lofty goals such as zero waste by 2040 and a one-size fits all
approach was bound to result in increased costs for ratepayers. This came true, but even worse than
expected.

The Taxpayers Union and some concerned ratepayers sent a series of official information requests to the
Council to try and figure out the real costs for ratepayers. They got 14 responses (referred to as LGOIMA
responses in this paper). More requests have been sent. The information in this briefing paper is based on
those responses as well as the Councils Long-term Plans, Annual Reports and meeting papers. Some of the
tables below are directly from the LGOIMA responses and others are based on those responses and other
material. All headings to the tables are ours as are any mistakes in this paper. We would welcome comment
or correction by the Auckland Council.

The LGOIMA responses show that the Council is expanding its reach and control over the solid waste market.
We calculate that by 2018/19 Rodney, Waitakere and North Shore households will be facing the following
average increases in solid waste costs:
46% increase for Rodney households
107% increase for Waitakere households

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64% increase for North Shore households

In short, our concerns are:
Auckland Council is misleading ratepayers on how much the new standardised solid waste services will cost
them;
There is no guarantee that Councils standardised one-size fits all rubbish and recycling collection will be
more efficient and cost-effective the Councils own figures show the opposite to be true;
Targeted rates and general rates for solid waste services have increased significantly since 2012 and will
continue to increase significantly;
The costs are much more than expected when Auckland Councils WMMP was adopted in 2012;
The Council is trying to increase its share of the kerbside rubbish collection market by selling prepaid orange
rubbish bags at a lower cost than its competitors in the private sector. In fact the increases in targeted rates
and general rates by far outweighs any small saving a household may gain in the rubbish bags; and
Households cannot opt out of paying for Council services in the targeted rate.
The Auckland Ratepayers Alliance challenge Auckland Council to:
Stop increasing targeted rates and general rates to pay for the Councils empire building;
Stop attempting to drive out private operators by insisting on standardised services, methodology and prices;
Allow ratepayers to opt out of all Council waste services and operations and choose their own private sector
providers.
If this isnt done the Council will have a monopoly over solid waste services and operations in Auckland.
Costs will keep going up. Households will have no choice.

BACKGROUND

Prior to the establishment of the Super City, the legacy Councils operated a range of refuse contracts and
services. In the former Auckland and Manukau Council areas refuse collection was completely rates funded.
In North Shore, Waitakere, Franklin and Papakura, the Council provided user pays services and competed
directly with private operators in a market environment. Council market position in these markets had been
declining due to the provision of preferred private sector services and competitive pricing. In the former
Rodney Council, no Council run services were provided at all and households contracted directly with their
preferred private supplier.

Immediately following formation of the Super City in 2010 the Council said in its Waste Assessment that it
needed to take back the collection of refuse to secure their objectives under the Waste Minimisation Act
2008.

Council diluted their original intentions in a revised Waste Minimisation and Management Plan (WMMP) in
2012. The WMMP proposed to have from July 2015:
Fortnightly disposer-pays kerbside refuse collection using wheelie bins in urban areas cost of 80ltr bin $2.50
per lift;
Fortnightly disposer-pays kerbside refuse collection using mix of wheelie bins and pre-paid bags in rural areas;
Fortnightly kerbside recycling collection using wheelie bins private-good-funded (through rates and other
funding sources);
240ltr wheelie bin recycling service for former Rodney area;
Kerbside collection of organic waste for urban areas only private-good-funded; and

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Inorganic collection for bulky items etc.

The kerbside bins havent arrived. According to a Council meeting on 6 August 2015 standardised recycling
receptacles across the region are expected by mid 2018 and the phasing in of user charge refuse services
complemented by introduction of organic waste collection services, commencing between late 2017 to
2018 1. Prepaid refuse bags and 240 litre recycling bins are expected to be introduced in the Rodney former
area in 2016/2017.

The Council isnt even close to being on track. Yet the costs have been steadily increasing as shown by the
tables below.

FACTS AND FIGURES ON COST INCREASES

Ratepayers and households will pay more through steady increases in the targeted rates and general rates
component for solid waste. Added to that is the cost of the disposer pays refuse collection. The amount of
increase will vary between the different legacy areas.

COUNCIL TABLES: Estimated figures for Solid Waste:

The Council gave the following tables in a LGOIMA response. Table 1 shows the overall costs and non-rates
revenue for solid waste for Years 1 through to 10 (2015/16 to 2024/25).2 2015/16 is called Year 1 as that is
the year the Council planned to roll out the new services. Operating expenditure increases from $122.2
million in 2015/16 to $171.7 million in 2018/19 (on average). This is a 40% increase.

TABLE 1: Councils Solid Waste estimated expenditure and non-rates revenue

Operating
cost and
revenue
$000

Operating
expenditure
*
Non-rates
revenue

Year 1
2015/16

Year 2
2016/17

Year 3
2017/18

Years 4-10
2018/19
2024/25

Total

122,278

137,569

147,544

1,201,580

1,608,971

33,244

39,992

50,446

454,211

577,893

*Operational expenditure includes interest, depreciation and corporate overhead allocation

Table 2 has the Councils projected figures for general rates and targeted rates for solid waste. Revenue from
general rates is expected to increase from $14.9 million in 2015/16 to $21.4 million (on average) in 2018/19).
This is a 43.6% increase. Revenue from targeted rates is expected to increase from $73.6 million in 2015/16
to $85 million in 2018/19 (on average). This is a 15.5% increase.

TABLE 2: Councils Solid Waste estimated rates revenue

Rates
revenue
$000

General
rates
Targeted
rates
Total

Year 1
2015/16

Year 2
2016/17

Year 3
2017/18

Years 4-10
2018/19
2024/25

Total

14,869

19,245

18,688

149,658

202,461

73,588

77,551

77,636

595,068

823,843

88,457

96,796

96,324

744,726

1,026,304

Despite the Council promising in 2012 that ratepayers would be no worse off financially in the long term, the

1 Agenda for meeting of the Regional Strategy and Policy Committee on 6 August 2015
2 LGOIMA response. 16 March 2016

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Councils own figures show a steady increase in costs. In Table 3 the Council predicts the indicative impact
of the overall cost increase on residents.3

TABLE 3: Councils increase per household predictions

Household size

Average household
Average large
household
Average small
household

Additional charge per

annum

Additional charge per

week

$25
$46
(ACC $76, MCC $71)
$12
(High of $60 in
Waitakere)

$0.50
$0.88
(for ACC $1.50)
$0.23

Additional charge per

annum if dont use
organics or reduce
waste volumes
$50
$80
$29

OUR TABLES: Based on Council reports and plans

We know for a fact that households will pay much more for their rubbish and recycling than what the Council
is claiming in Table 3. We have used the Councils tables and data from Annual Reports to create our own
tables.

Table 4 uses historic annual reports to show how the level of rates revenue for solid waste has increased
from 2011/12 and how it will continue to increase.

TABLE 4: Our Solid Waste rates revenue figures for 2011/12 to 2024/25

Rates
revenue
$000

Year -3
2011/12
4

Year -2
2012/13
5

Year -1
2013/14
6

Year 0
2014/15
7

Year 1 Year 2 Year 3 Year 4

2015/16 2016/17 2017/18 2018/19
8

General
rates
Targeted
rates
Total

11,570

2,074

15,000

12,000

14,869

19,245

18,688

Years 410
2018/19
2024/25
21,380
149,658

32,949

63,311

60,000

68,000

73,588

77,551

77,636

85,010

595,068

44,519

65,385

75,000

80,000

88,457

96,796

96,324 106,390

744,726

Using the historic annual reports, the total generated by rates prior to the WMMP was $44.5million. This
jumped to $75 million in the first year after the WMMP. By 2015/16 the rates revenue had almost doubled
to $88.5 million. This is expected to increase to about $106 million by 2018/2019. The percentage increase in
revenue from 2011/12 to 2018/19 is 138% and from 2014/15 to 2018/19, 32%.

The Councils figures take into account inflation and population growth. We have used the Councils tables
from the LGOIMA responses, data from Council Annual Reports and Long-term Plans, and our own
knowledge of the cost of kerbside rubbish collection, to predict how much this will cost individual
households. Our figures also allow for an increase in population.

Table 5 uses figures from the LGOIMA responses, the Councils Long-term Plans and Annual Reports. It
shows that between 2014/15 and 2018/19 household waste costs will probably increase by 46% for Rodney

3 from LGOIMA response no. 9000139497
4 Auckland Council Annual Report 2011/12, page 159
5 Auckland Council Annual Report 2012/13 page 257
6 Auckland Council Annual Report 2013/14 Table 6.23, p 145
7 Auckland Council Annual Report 2014/15 vol. 1 table 6.1 on page 198
8 Taken from the figures for Years 4-10 in Council table (average figure per year)

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residents, 107% for Waitakere residents and 64% for North Shore residents.

TABLE 5: Our Solid Waste rates revenue figures for Rodney, North Shore and Waitakere

Increase Per Council Zone

2014/15 2015/16 2018/19
targeted rate for solid waste - Rodney
86.93
103.23 170.00
9
targeted rate for solid waste - North Shore
64.05
88.68 170.00
targeted rate for solid waste - Waitakare
23.36
88.68 170.00
10
general rates, UAGCs rates penalties for solid waste
25.53
31.63
42.75
User pays rubbish collection (based on 52 bags at
average of $211 per bag)
104.00
104.00 104.00
TOTALS



Rodney household charges for solid waste services
216.46
238.86 316.75
North Shore Charges for Solid Waste Services
193.58
224.31 316.75
Waitakare Charges for Solid Waste Services
152.89
224.31 316.75

2014/15
to
2018/18
increase
95%
165%
627%
67%


46%
63%
107%

WHAT DOES THE TARGETED RATE COVER?

The Councils targeted rate for solid waste (at least in Rodney) is used for:
recycling collection;
inorganic collection;
Hauraki Gulf Islands subsidy;
waste service standardisation charge; and
resource recovery centres.
The WMMP classifies these as private good services that meet waste management and minimisation
objectives, but benefit individual households.

A Council response to a LGOIMA request gave the follow breakdown of the targeted rate for Rodney. This
increased from $89.34 per household in the 2012-20122 LTP to $103.23 in the 2015-2015 LTP.

9 Targeted rate figures for all legacy areas are from:

2014/15 and 2015/16 figures from: Auckland Council Long-term Plan 2015/16
2018/19 figure from a response from the Council to a LGOIMA request which had targeted rates for solid waste at
$595,068,000 for years 2018/19 to 2024/25 (i.e. 7 years). This comes to 85,009,710 per year on average. This is
$170.01 per household (assuming 500,000 households in all of Auckland).
10 General rates figures are estimated averages taken from:
- 2014/15 - Auckland Council Annual Report 2014/15, Vol. 1, table 6.1 which has 12m for general rates, UAGCs, rates
penalties. This is $25.53 per household (assuming 470,000 households in all of Auckland)
- 2015/16 - from a response from the Council to a LGOIMA request which has general rates for solid waste at $14,869 for
years 2015/16. This is $31.63 per household (assuming 470,000 households in all of Auckland).
- 2018/19 - from a response from the Council to a LGOIMA request which has general rates for solid waste at $149,658
for years 2018/19 to 2024/25 (i.e. 7 years). This comes to 21,379.71 per year on average. This is $42.75 per household
(assuming 500,000 households).
11 Council bags currently retail for $1.95, bags provided by private waste collectors range from $2 to $2.45
-

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TABLE 6: Council breakdown of solid waste targeted rates for Rodney

Service
Recycling
Inorganic collection
Refuse (e.g. refuse transfer stations,
resource recovery centres)
Hauraki Gulf Islands subsidy
Total

2015/16 targeted rate per household

$60.89
$22.77
$15.74
$3.84
$103.23

Auckland residents living in multi-unit households are the only Auckland residents who can opt out of the
targeted rates. No other household can opt out of paying the targeted rates even if they choose not to use
them. The Council said in a LGOIMA response: 12
The kerbside recycling collection is considered a private good service that meets waste management
and minimisation objectives, but benefits individual households, as outlined in the WMMP (p.41-42).
This is paid for through the targeted waste rate by all Rodney households where the service is
provided, regardless of whether a resident chooses to use the service or not.
This effectively cuts out competition from private operators. Why would a household choose to use a private
operator when they are already paying for recycling services in targeted rates? Households must recycle. If
they refuse to separate their waste for collection into refuse, recyclable material and organic matter, and
deposit it in a Council approved container they could be fined up to $20,000 under clause 35 of Auckland
Councils Solid Waste Bylaw 2012. The targeted rate is being used to protect Auckland Councils monopoly
over recycling collection.

WHAT ABOUT GENERAL RATES?

The solid waste component of the general rate fund is for what the Council classifies as waste management
services that provides services with public good or public benefit elements e.g. litter bins, hazardous waste,
waste education etc. Table 7 has the Councils estimated general rates for the component of waste
management services that provides services with public good or public benefit elements.13

TABLE 7: Councils estimated increase in general rates for waste management services
$000

Budget
Budget
2016
2017
Financial year ending 30 June
General
14,869
19,245
rates,
UAGCs,
rates
penalties

Budget
2018

Budget
2019

Budget
2020

Budget
2021

Budget
2022

Budget
2023

Budget
2024

Budget
2025

18,688

15,450

21,564

20,586

23,188

22,993

23,870

22,007

KERBSIDE REFUSE COLLECTION: COUNCILS ORANGE BAGS

The only choice most households have is whether to pay for the Councils prepaid bags for kerbside refuse
collection, or use private sector collection services.

Auckland Council introduced new regional wide orange rubbish bags on 1 November 2015. They were
initially introduced in Waitkere, North Shore, Franklin and Papakura. The Council already had full control of
the kerbside rubbish collection market in the former Auckland and Manukau Council areas. The former

12 LGOIMA response, 10 March 2016
13 LGOIMA response to Taxpayers Union, 900013944, 10 March 2016

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Rodney area was the only legacy area where the Council did not compete or have any share of the market.

The Council is purposely pricing their bags to be cheaper than private waste collector bags in order to try and
expand its share of the market. A memo from a Council manager to the councillors and Independent Maori
Statutory Board in October 2015 said: 14
the new bag is competitively priced
the campaign aligns with the business units focus on maintaining and growing market share
the campaign and tagline buy the bag that gives back builds on the North Shore bag promotion
used in March 2015, which saw an eight per cent increase in market share of the rubbish bag during
the promotional period
Surplus revenue that the council receives from bag sales is invested in other waste-related services
and programmes, which is a key point of difference to our competitors
A second memo a few days later said: 15
From Monday 2 November, residents living in Papakura, Waitakere, Franklin and the North Shore will
be able to buy their council rubbish bags in a variety of sizes from more outlets and, in most areas at
cheaper prices.
The launch of the new orange regional bag delivers the following benefits compared with our
competitors:
more convenient for residents bags will be sold in all areas using prepaid rubbish bag service from
a variety of outlets as well as outlets in Aucklands CBD
a more consistent product, offered in a range of sizes supported by councils reliable service
uses the innovative tagline of the bag that gives back showing how we reinvest back into the
community through environmental education and waste minimisation initiatives.
The second memo had a table showing how much a household would supposedly save if they switched to
the new Council bags: 16

TABLE 7: Councils estimated savings if use orange bag

14 Memo from Ian Stupple, manager Waste Solutions, Infrastructure & Environmental Services, 16.10.15 to Elected Members and

IMSB provided in LOGIMA response to Taxpayers Union, 9000139834, 16 March 2016

15 Memo from Ian Stupple, manager Waste Solutions, Infrastructure & Environmental Services, provided in LOGIMA response
NZTU 9000139834, 16 March 2016
16 Memo from Ian Stupple, manager Waste Solutions, Infrastructure & Environmental Services, provided in LOGIMA response
NZTU 9000139834, 16 March 2016

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It is obvious the Council is trying to take over as much of the currently competitive kerbside rubbish
collection market as it can by using cheaper prepaid bags and the slogan the bag that gives back. A
LGOIMA response explained it like this: 17
The implementation of the new and revised waste services in phases includes a review of legacy
waste service contracts currently still in use, as these approach the end of their lifespan, to determine
the ability of contractors to deliver the required revised and new services, using the approved
methodology and system. The legacy contracts mostly do not provide for nor accommodate the new
and revised waste services as they are often outdated and do not require service providers to use the
newly approved standard methodology and system nor to provide the revised or new services using
the standard methodology and system.
What the Councils material does not say is:
The increase in targeted rates and general rates by far outweighs any small saving a household may gain in the
rubbish bags.
Some retailers are selling the orange bags even cheaper at $1.75 (most likely at a loss).
The Council has conducted an aggressive advertising campaign for the orange rubbish bags including large
billboards on the side of rubbish trucks, theres no mention of how much this has cost.
The new prepaid bags are significantly cheaper than the prices of old bags in all affected areas except for
Papakura (where the price was $1.95). Waitakeres grey bags cost $2.25 each, Franklins cost $2.20 (bag sticker)
and North Shores cost $2.25. How can this be?
The figures in the table for 60 litre bag was are wrong if they are supposed to represent bags provided by
private sector collectors. In Table 5 we estimate $2 per bag (based on a 60 litre bag and industry advice). In
other words, there may not be such a big difference in the cost of rubbish bags as the Council is claiming.
The Councils Waste Assessment and WMMP insisted bins were better than bags for refuse collection. Yet they
are aggressively advertising the orange bags. What about those health and safety concerns the Council claimed
in the Waste Assessment which meant bags shouldnt be used? How soon will the bags be replaced by bins?
How much will they cost?
Theres no mention of the cost in loss of flexibility. Private providers offer a range of bags or bins and have
more flexibility over frequency of collection, timing and access.
The Council says it is making a surplus from the sale of the bags and using this surplus in environmental
initiatives. We find this hard to believe. Where are the bags made? Is the cost of the aggressive sales
campaign taken into account? What about overheads? In a response to a LGOIMA:18
In response to your request we can confirm that the overall surplus for the 2015/15 financial year
from the sales of the pre-paid refuse bags was $481,294. The surplus for this financial year (2015/16)
is estimated to be similar. All proceeds from bag sales (surplus) are re-invested in environmental
initiatives.
What are these environmental initiatives? The LGOIMA responses refused to provide details on projects
funded by this surplus. A table from the Annual Budget for 2014/15 shows money going to Enviroschools,
Education resources, and waste minimisation and education. 19 These are vague answers to vague promises.

We do know the targeted rates are being used to subsidise (or pay for) refuse transfer stations and resource

17 LGOIMA response, 16 March 2016

18 LGOIMA response to Jordan Williams, 9000140132, 16 March 2016

19 LGOIMA response to Jordan Williams, 9000140132, 16 March 2016

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recovery centres. These may be in direct competition with private operations.

A Council agenda for a meeting in October 2014 explained the Resource Recover Network strategic
direction:
Resource Recovery Network strategic direction proposal to establish 12 Community Recycling
facilities over a 10 year period. Site selection by Auckland Council Property Ltd and Solid Waste Unit.
2 phases. First phase 2013-18 6 council owned facilities, 4 community recycling centres at Waiuku,
Helensville, Devonport and central area, enhanced recycling facility at Whangaparoa, and 1
commercially focused resource recovery park including a community recycling centre at Waitakere.
2nd phase for 6 addition facilities (council owned and third party owned). Potential areas include
Warkworth or Wellsford. Aim to divert 8.700 tonnes of waste from landfill annually and create
around 85 full time jobs. $1million per year capital expenditure, current net operating cost of transfer
stations and sites suitable for community recycling centres is $780k per annum. Expect net operating
cost until 24/25 (table starts 0.78 14/15 then decreases to 0.32 24/25 ($m). Estimated waste
diversion from Community recycling centre sites - table includes 452 tonnes from North
(Warkworth/Wellsford)
This all sounds good. But hows progress? How will it affect private competitors? Are ratepayers aware they
are funding this new network? How much will it cost them?

CROSS-SUBSIDISATION
Section 46 of the Waste Minimisation Act 2008 allows councils to charge fees for a particular service that are
either higher or lower than the actual costs if this fee structure is provided for, and supports the aims, of the
WMMP. In effect this allows councils to cross-subsidise one activity (i.e. green waste recycling) through
charges of another (i.e. general waste disposal).

The Council admits in a LGOIMA response that there is a small cost allocation in targeted rate towards
refuse collection .20

This is so the council can provide the same level of service at the same price for bag or bin across remote
rural and urban areas.

We question this. It is using targeted rates intended for services that meets waste management and
minimisation objectives to fund refuse collection which doesnt meet the objectives of the WMMP as it is
not reducing waste going to landfill. In fact it is doing the opposite of what section 46 intends.
However, the Council also said when council introduces a service in Rodney this subsidy will be stopped.
Watch this space.

EMPIRE BUILDING
Councillor Penny Webster said in a press release on 26 April 2016 More efficient rubbish system for
Rodney that the Council wheelie bins will soon be coming to Rodney. She said:21
This will not be introduced in Rodney yet, but is coming. Having standard systems for rubbish and recycling
collections will be more efficient and cost effective.
Council has admitted in a LGOIMA response that it is: 22
unable to determine the impact of these changes on the targeted rates

20 LGOIMA response, 10 March 2016
21 More efficient rubbish system for Rodney http://ourauckland.aucklandcouncil.govt.nz/articles/news/2016/04/more-

efficient-rubbish-system-for-rodney/
22 LGOIMA response, 10 March 2016

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It is clear the Council still wants to grow its share of the market and have more control over it. It doesnt care
how much the increase in costs will impact on Auckland households and ratepayers when added to the other
increases in general rates, transport levy etc.

The Council uses the word standardisation a lot in the LGOIMA responses. It is based on the following
assumptions:
A one-size fits all approach with standardised services, methodology and systems will be more appropriate
than non-standardised;
Council knows what services are best despite the private sector doing rubbish collection for many years;
Private operators cant be relied on to undertake environmental initiatives;
Aucklanders will like the Councils cheaper rubbish bags, and not care about the huge increases in rates; and
Aucklanders dont care about having less choice and flexibility in their rubbish collection.
We dispute all of these assumptions.

Our concern is that the targeted waste may be used in Rodney (or other Auckland areas) in such a way to
make it difficult for private sector to continue. We dont see how cutting out the competitive commercial
sector will benefit ratepayers. We know it will mean continued increases in rates for households.

On this basis we need to ensure that residents have the ability to opt out of Council rates-funded services
and receive a rates rebate if they are able to source more efficient privately run services.

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