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Appendix B


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APPENDIX B - CONSULTATION

1. Submissions to the Auckland Governance Legislation Select Committee

2. Correspondence and initial meeting minutes between the council/ ATA andTranspacific Industries

3. Copies of minutes of preliminary consultation meetings with waste industrykey stakeholders

pg 4

pg 78

pg 100

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SUBMISSIONS TO THE AUCKLAND GOVERNANCE

LEGISLATION SELECT COMMITTEE

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9 February 2010

Submission to:

EnviroWaste arhg =sV =ol! Aucklano Governance /L...~slation Comnfitteej

The Auckland Governance Legislation Committeeon the:

Local Government (Auckland Law Reform) Bill

This submission is made in the name of:

EnviroWaste Services Ltd (ESL), 354 Neilson Street, Onehunga,Auckland

ESL wishes to appear before the committee to speak to itssubmission.In particular ESL wishes to comment on Clause 11 Part 1 of the Billwhich addresses the functions and duties of the Transition Agency,including with regard to governance of solid waste by AucklandCouncil. In summary, ESL's position is:a. The Bill should be amended to enable an industry discussion on

the possible formation of a Public Private Partnership (PPP)between Auckland Council and private landfill owners to controlthe region's solid waste disposal functions. This would deriver:

cost efficiencies to ratepayers; solid waste minimisation and greater resource recovery forA uckland Council;

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regulated solid waste disposal pricing;b. The Bill should be amended to provide for the potential

consolidation of the solid waste functions and assets of AucklandCouncil into a Council Controlled Organisation.

1. Executive Summarya, With the establishment of Auckland Council there is an

opportunity to reconfigure the control and governance of solidwaste infrastructure in Auckland. However, enabling legislation isrequired to provide: Commerce Act exemption so the ATA can enter discussions

with industry participants; andThe formation of a Solid Waste CCO so it may enter into aPPP with the owners of the landfills that serve Auckland TPI/MCC, TPI and ESL.

b. In ESL's submission, the management of regional solid wasteissues should not be dealt with in a piecemeal way. A separate,dedicated CCO should be set up to plan and manage regionalsolid waste matters, including existing JVs, contracts and otherarrangements for waste.

C. The amendment to the Local Government (Auckland LawReform) Bill to enable the creation of a PPP does not commit theATA or Auckland Council to such a course. It does howeverprovide the new council with the necessary legal instrument toget on with it. Such an opportunity to create the appropriatelegislative settings is unlikely to present itself again.

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2. Envirowaste Services Ltd (ESL)

a. Envirowaste Services Ltd (ESL) is the second largest operator inthe New Zealand waste services market.b.

C.

ESL offers services to councils, the public and industry throughcollection services, landfills and transfer stations throughout thecountry.ESL owns and operates the largest landfill to serve the Aucklandmarket at Hampton Downs with more than 30 million cubicmetres of airspace available. Hampton Downs is a world classlandfill engineered to the highest standards of global bestpractice, including capture of leachate and recovery of gas fromwhich electricity is generated to power 1,500 households. Over500,000 tonnes of refuse is handled annually by ESL's collection,waste processing and waste disposal facilities throughout theAuckland region.

d. ESL was established in Auckland in 1991 as Northern DisposalSystems Limited (NDSL), a 100% owned subsidiary ofInfrastructure Auckland, a public body owned by the Councils ofthe greater Auckland area. It later joint ventured with the WasteServices Division of Fulton Hogan Limited in the South Island.

e. In April 2007 EnviroWaste was purchased by funds, managed oradvised by Ironbridge Capital. These funds are leading providersof private equity to growth businesses in New Zealand andAustralia.ESL has accordingly been owned by various public and privateownership structures and has also been a partner itself insuccessful PPPs elsewhere in New Zealand notably TranswasteCanterbury Ltd in Christchurch.

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3. Transwaste Canterbury Ltda. ESL was a founding partner of Canterbury Waste Services Ltd,

which formed a PPP between local government and NewZealand's principal landfilling companies to establish andmanage waste disposal facilities for the Canterbury Region asTranswaste Canterbury Ltd.

b, The model is regarded as an exemplar for governance of solidwaste assets designed to drive solid waste minimisation. Themodel satisfies the objectives of many parties in the followingways:

C.

For the community:> Competition retained for kerbside collection of three binsolid waste streams.> Solid waste minimisation targets achieved.> Leading resource recovery and recycling initiatives madepossible.

For local government:> Delivery on solid waste minimisation plans.> Control of solid waste disposal pricing.> Facilitating resource recovery and recycling initiatives.

For industry partners:> Regulated solid waste disposal pricing.> Operational control of facilities.

A detailed summary of Transwaste Canterbury Ltd's formationand operations is included at Appendix One.

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4. Auckland solid waste infrastructurea. The current configuration of solid waste infrastructure in the

Auckland region is as follows:Three large landfills provide the region's solid waste disposalfacilities:

Whitford owned by a joint venture 50% TranspacificIndustries (TPI), 50% Manukau City Council.Hampton Downs owned by ESLRedvale owned by TPI.

Eleven major transfer stations owned by ESL, TPI, otherprivate companies, local authorities and joint venturesbetween various of these parties.

b. In addition, Council kerbside collection contracts are awarded ona contestable basis to private collection companies, some ofwhich own landfills and transfer stations and others that havecontractual relationships with landfill and transfer station owners.Disposal of solid waste collected as a result of these contractstends to be awarded by Council directly to the landfill company.This solid waste can be delivered directly to the landfill by thecollection vehicle or via a transfer station where solid waste isconsolidated. A map of Auckland detailing the location of transferstations, landfills and solid waste flows are included in AppendixTwo.

c. The effect of this structure, developed over many years to serveseven separate local authorities each with a different Waste

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Minimisation and Management Plan, has been to produceseveral perverse outcomes including:

Major transport inefficiencies have come about through thelack of coordination between kerbside collection contractors,transfer stations services with their different ownershipstructures and the privately owned landfills.By Auckland Council not owning or controlling sufficient ofthe relevant solid waste infrastructure, thus denying Councilcontrol over the solid waste streams and accordingly theability to divert solid waste away from landfilling which is aprecondition to meeting the WMA targets, solid wasteminimisation in Auckland region is frustrated. Variousindependent reports have highlighted this issue, including the2009 Royal Commission on Auckland Governance report,which noted that there would be considerable scope forimproving Auckland's solid waste minimisation performancethrough the coordination and integration of the region's solidwaste management functions.Without solid waste diversion, consumption of availablelandfill air space will continue unabated. This may wellexpedite the need for a replacement Auckland landfill withthe associated consenting issues and construction costs andamenity concerns.

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5. The Waste Minimisation Act 2008a. ESL acknowledges that:

The objective of the WMA and the associated NZ WasteStrategy and Targets, is to reduce the volume of waste tolandfill and promote sustainable resource use and resourcerecovery.

b.

Under the WMA Auckland Council is required to produce aWaste Minimisation Plan (WMMP) with clear targets forreducing volumes of waste to landfill.

As a responsible NZ company, ESL supports the objectives ofthe WMA and is in the process of investigating and introducing anumber of recycling and resource recovery initiatives.

6. Auckland Waste Stocktake & Strategic Assessment 2009a As the Auckland Regional Council's Technical Report No.107

(October 2009) Auckland Waste Stocktake & StrategicAssessment 2009 recognised, the current model is not ideal forthe Auckland region as the private sector has a different set ofimperatives to the public sector. There are certain public goodsthat are not provided for under the current model:

Increasing solid waste diversion: private sector landfilloperators have a natural driver to secure as much solidwaste tonnage as possible to fill up landfills and repayinvestment;

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Although an authorisation process can take into accountwider public benefits and efficiencies, the processes arecumbersome. In addition, the Commerce Commission, as aneconomic regulator, does not have the same ability asParliament to weigh nonprice benefits such asenvironmental benefits, which are primarily policy driven.Such an exemption is not unprecedented. For example s 91of the Civil Aviation Act 1990 contains a similar exemption tothe exemption sought here.

8. Formation of Waste Services Agencya. ESL seeks that the Bill be amended to expressly establish a CCO

of the Auckland Council in relation to solid waste functions. Theobjective of this CCO would be to undertake its functions in a waythat contributes to affordable, integrated, and sustainable solidwaste services in Auckland.

b. This new CCO, in addition to having the full capacity to carry onor undertake any activity or any business to achieve its objectivesand functions, would be expressly enabled to enter into sucharrangements as JVs or PPPs with private landfill owners inrelation to the region's waste disposal functions.

C, The Bill clearly envisages that Auckland will achieve longtermintegrated solid waste management and minimisation planningand services. This is made clear by clause 11, which proposesto amend section 13(1) of the Tamaki Makaurau Act by insertinga new subsection (cb)(ii) requiring the ATA to oversee thepreparation by existing local authorities of detailed proposals for

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d.

e

g

achieving longterm integrated waste management planning,including proposals for managing waste contracts, leases andother arrangements.ESL considers the Bill should go further, and provide cleardirection to the ATA or the Auckland Council to establish a CCOin relation to solid waste management in Auckland. CCOsprovide a mechanism by which the benefits generally associatedwith private corporatisation, most importantly transparent costidentification, can be obtained while maintaining public ownershipand oversight in relation to the services provided.The Bill already authorises the ATA to constitute CCOs (seeclause 24, new section 35G).The Bill also expressly provides for specific CCOs to beestablished, including a new CCO on transport, to be called"Auckland Transport" (new section 38 of the Auckland CouncilAct proposed by clause 35 of the Bill), and the "WaterfrontDevelopment Agency (new section 19B of the Tamaki MakaurauAct proposed by clause 18 of the Bill).In ESL's submission, the Bill should also expressly provide for theestablishment of a CCO on solid waste. This could beaccomplished in the Bill through a similar provision to thatrequiring the establishment of the Waterfront DevelopmentAgency.

9. Observationsa. ESL's observations in respect of this Bill are that:

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will need to engage with private industry which may give riseto Commerce Act 1986 issues described above.

10. Legislative recommendationsa. For the above reasons ESL seeks a new section to be inserted

by clause 19C of the Bill as follows:19C Establishment of Auckland waste services agency

(1) The Transition Agency must establish a councilcontrolledorganisation for Auckland Council, to be known as the WasteServices Agency, with responsibility for coordinating, providingand/or procuring the provision of solid waste services inAuckland.

(2) For the purpose of performing its functions, theWaste ServicesAgency (or any entity acting under the control or direction of theWaste Services Agency) may enter, carry on or undertake anyactivity or business, do any act, or enter into any transaction orarrangement. For the avoidance of doubt, this includes jointventures, partnerships or any other arrangements with privateentities.

(3) Nothing in Part 2 or Part 3 of the Commerce Act 1986 shallapply to or in respect of(a) the negotiation or conclusion of any contract, arrangement,or understanding between the Waste Services Agency (or anyentity acting under the control or direction of the WasteServices Agency) and one or more private entities pursuant to(2) above, and any conduct giving effect to such contract,arrangement or understanding; or(b) The negotiation or conclusion of any contract, arrangement,or understanding so far as it contains a provision relating to theforrnation of any business activity for the purposes described in(2).

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bo

(4) Section 35G applies to the establishment of the organisation asif the organisationwere an organisation recommended to beestablished under that section.

If the suggested clause 19C above is not to be enacted then, asan alternative, the following alternate clause 19C, should beenacted:19C Application of Commerce Act 1986

(1) Nothing in Part 2 or Part 3 of the Commerce Act 1986 shallapply to or in respect of(a) the negotiation or conclusion of any contract, arrangement, orunderstanding between the Auckland Council or council controlledorganisation (or any entity acting under the control or direction of theAuckland Council or council controlled organisation) and one or moreprivate entities for the purpose of coordinating, providing and/or procuringthe provision of solid waste services in Auckland. For the avoidance ofdoubt, this includes joint ventures, partnerships or any other arrangementswith private entities; or(b) The negotiation or conclusion of any contract, arrangement,or understanding so far as it contains a provision relating to theformation of any business activity for the purposes described in(1)(a).

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APPENDIX ONECASE STUDY ON CANTERBURY WASTE SERVICES

Transwaste Canterbury Limited ("Transwaste") is a good example ofa successful publicprivate joint venture in the solid waste industry.Formed in 1998 as a Local Authority Trading Enterprise under theLocal Government Act 1974, Transwaste is now a CCO under theLocal Government Act 2002. Transwaste is 50% owned by fiveCanterbury local authorities (Ashburton, Hurunui, Selwyn, andWaimakariri District Councils, and Christchurch City Council).1 Theremaining 50% is owned by Canterbury Waste Services Limited (asubsidiary of Transpacific Industries Group (NZ) Limited).

Transwaste was formed because Canterbury local authoritiesrecognised the need to adopt a strategic approach to wastemanagement, including meeting modern environmental standards.The annual combined total waste produced by the districts of the sixoriginal participating councils was about 277,000 tonnes in 1997 ieonly enough waste to justify one new landfill site equipped to meetthe necessary standards. A number of private companies alreadyowned potential landfill sites in Canterbury, and the councils did notwant to compete directly with these companies. In entering into apartnering arrangement with the private sector, the councils involvedcould benefit from the private sector's greater technical knowledge ofthe requirements of modern landfills, without having to relinquishownership of the landfill site or influence over the way it operated.This was particularly important because a comprehensive regionalwaste strategy had been prepared by the Canterbury Waste JointStanding Committee, to which all the councils belonged. The

1 Ten Canterbury councils were involved in establishing the project, though only six decided to participate.The other Councils have reserved the option to join later.

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strategy integrated residual waste disposal by landfill with wasteminimisation measures. The councils therefore considered there wasa strong public sector interest in remaining involved to ensure thatthey could influence what happened throughout the whole of thewaste chain.

The councils recognised early on that the site would have to belocated in one of their districts, and the council of that district wouldinevitably face local opposition. A joint venture company couldoperate at arm's length from the councils involved, including therelevant council, and be able to choose the best site from anenvironmental perspective, removing potential for political influenceto override inherent site suitability. The private sector companiesalso understood that waste volumes were sufficient for only oneeconomic facility, and saw the advantage in a joint approach.

The role of Transwaste was to select the landfill site, obtainconsents, build, own, and operate the landfill. Canterbury WasteServices Limited was contracted by Transwaste to obtain allnecessary consents, and to design, build, and manage the newlandfill for Transwaste. The Councils funded half of the initial capitaloutlay of $16 million; the remainder was funded by CanterburyWaste Services Limited. A further $20 million capital required for theconsenting process and establishment of the landfill was funded bydebt. Ongoing operational costs are met from income received. Theresulting landfill (at Kate Valley, Hurunui District) has a predicted lifeof 35 years.

The councils that are party to the joint venture and CanterburyWaste Services Limited have undertaken to send all their waste tothe Canterbury regional landfilL Independent checks and audits,

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including the appointment of independent legal and financial probityand financial auditors, have been instituted, to ensure that the landfillcompany acts as though it were in a competitive market.

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APPENDIX TWO A MAP OF AUCKLAND DETAILING THE LOCATION OF TRANSFERSTATIONS, LANDFILLS AND WASTE FLOWS

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Notes: Key source of ]nefficienciesis siteownership, with longer dlsisncestravelled to maximise profits Somemutes result in closer RTSbeing passed enroute 1o olher RTSsor landfill further e field Dlrect transport from kerbside tolandflll may result In lost opportunltiesfor consolidation and diversion Curen| routes create significanthaulage across Harbour Bridge

....

\

FacilitiesO R=US~R.R.eTt.nsferswan(RTs} o a.usmon

'I'I Rauune

Ownership I ControlESLT PIMCC

NSCCACCWCC

Mekowasts

Waste Routesso Diready to LarxNiU ToTramfer Sistkxt T~nsfer Slatkxt to LarxNi0

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TO: AUCKLAND GOVERNANCE LEGISLATIONSELECT COMMITTEE

ON: LOCAL GOVERNMENT (AUCKLAND LAW REFORM) BILL

12 FEBRUARY 2010

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INTRODUCTION 1 This submission is from Transpacific Industries Group (NZ)Limited (TPI).

2 Transpacific wishes to be given the opportunity to presentour submission in person to the Auckland Governance

Legislation Committee.

Our contacts are:

Tom Nickels

Managing Director

Transpacific Industries Group (NZ) Ltd

Private Bag 14919

Panmure

Auckland 1741

[email protected]

(09) 574 0880

Marion FranksLegal CounselTranspacific Industries Pty LtdPrivate Bag 14919PanmureAuckland [email protected](09) 574 3615

ABOUTTRANSPACIFIC

3 TPI is part of Transpacific Industries Group Limited, a majorpublicly listed company on the ASX, that provides

integrated industrial cleaning and total waste management

to customers across Australia and New Zealand.

TPI has a particular focus on the solid, liquid and hazardous

wastes markets and is a leading provider of comprehensive

recycling, waste and environmental services in New

Zealand.

Further details about TPIs New Zealand activities, and in

particular in the Auckland Region and with the Councils in

the Region, are provided in the Schedule at the end of this

Submission.

EXECUTIVE

SUMMARY

4 In general, Transpacific supports the Local Government(Auckland Law Reform) Bill (Bill) but there are severalissues regarding the governance of solid waste by theAuckland Council on which it wishes to make submissions.

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In summary, these are:

TPI submits that there is a strong case for the enablinglegislation to require the Auckland Transition Agency(ATA) and Auckland Council to explore, in conjunction

with waste industry participants, the merits ofestablishing a CCO for the management of Waste. Thiswould create a framework for Council to enter intoPublic Private Partnerships (PPPs) in the region (e.g.the Transwaste Canterbury model). This may assistwith improving transport efficiencies in the waste sectorand also assist Council with achieving its long termwaste minimisation objectives.

TPI submits that the delivery of waste services to boththe public and private sector should remain in privateownership to ensure ongoing market competitivenessand efficiency e.g. the current tendering processes

enable local authorities in Auckland to get best valuewaste management services to achieve effective andefficient waste management and minimisation.

The TPI/Manukau City Council (MCC) joint venture -Waste Disposal Services (WDS) is currently proposed tobe positioned under the CCO for Property Holdings &Development. TPI submits that this is not theappropriate CCO as while TPI and MCC each equallyown the airspace in the Whitford landfill, the land isowned by MCC. Further, the land at the East TamakiRefuse Transfer Station is owned by TPI and leased tothe JV. In the absence of a CCO for Solid Waste, then

TPI submits that the Councils interests in WDS shouldbe placed into the CCO for Council investments.

TPI submits that Clause 11(2)(cb), which expands therole of the Auckland Transition Agency (ATA) to overseethe preparation of options for Auckland Councilsconsideration with regard to waste management andminimisation, should include a requirement for theAuckland Council to engage and consult with wasteservice providers and waste generators to ensure thatthe best possible long term integrated and wastemanagement solutions for the region is achieved.

Clause 93 which relates to the timing of AucklandCouncils review of bylaws about waste. TPI submitsthat there needs to be transitional provisions in the Billto enable an appropriate lead in time for the wastemanagement industry to respond and adjust theirpractices, so as to ensure compliance with the newbylaws.

Clause 62 which imposes a moratorium on AucklandCouncil and its council-controlled organisations (CCOs)selling, transferring or otherwise disposing ofshareholdings in any company, and certain types of

land or buildings until 1 July 2012. TPI submits that this

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moratorium should only apply in circumstances wherethe CCO is wholly owned by the Auckland Council e.g.would exclude WDS.

CCO Solid Waste5

TPI, as the owner of landfills, transfer stations, hazardouswaste treatment and recycling facilities in the region,submits that there is a unique opportunity through thisenabling legislation for the ATA and Auckland Council toexplore, in conjunction with waste industry participants, themerits of establishing a CCO for managing Waste.

The establishment of a CCO for Waste could potentiallyprovide a key platform for the ATA and Auckland Council tocarry out its task of overseeing the work of existing localauthorities and the preparation of detailed proposals forachieving long term integrated waste management andminimising planning services as required under clause

11(2) of the proposed legislation.

Further, this CCO would have the potential to review theoverall infrastructure in the region for solid waste andconsider private public partnerships (PPPs) and privatesector participation as a part of its overall future strategy.

TPI submits that it will be essential for any consideration ofa CCO for waste to be done in conjunction with wasteindustry participants operating in the Auckland region.

Potential community benefits include:

achieving waste minimisation targets making more efficient use of the waste

infrastructure in the region (roads, landfills, transferstations, recycling facilities and hazardous wastemanagement)

improved overall governance in the waste sectorThe Transwaste Canterbury Limited (TCL) model (JVbetween TPI and five Canterbury councils) is a good

example of Councils and the private sector workingtogether in the solid waste sector.

TCL was formed in response to a comprehensive regionalwide waste strategy and through its partneringarrangement with the private sector ensured that the wasteindustrys best practice and technical knowhow wasincorporated into their regions long term solution.

Waste Collection

Services

6 TPI submits that the private sector is best placed to deliverwaste collection services to the greater Auckland

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community for the following reasons:

The private sector has access to international bestpractice and technologies, ensuring that ratepayersin the region have the most cost efficient service

Competition for Council kerbside collection servicesand private sector commercial & industrial servicesis strong and creates an efficient market benefitingthe entire community through competitive marketpricing.

A Council run monopoly would likely push up pricesand costs and ultimately increase costs forratepayers in the region.

TPI/ MCC JV 7 Waste Disposal Services (WDS) is an existingunincorporated joint venture between TranspacificIndustries (NZ) Limited and Manukau City Council, formedin 1993. WDS is responsible for the ongoing developmentand operation of the Whitford Landfill in Manukau City. Itis a council-controlled trading organisation as defined insection 6 of the Local Government Act 2002.

The Bill proposes that the Auckland Councils interests inWDS will rest with CCO for Property Holdings andDevelopment.

It should be noted that land on which the Whitford landfill

operates is owned by the MCC and the JV partners equallyown the landfill airspace. Further, the land that the EastTamaki Refuse Transfer Station is situated on is owned byTPI and WDS has a right to lease the site. WDS does notown any land.

TPI submits that, in the absence of a CCO for Waste, itwould be more appropriate for the Auckland Councilsinterests in WDS to be placed into the CCO for CouncilInvestments.

Transition Agencysrole regarding wastemanagement and

minimisation

8

Clause 11(2)(cb) of the Bill proposes to amend section 13of the Local Government (Tamaki MakaurauReorganisation) Act 2009 by inserting additional functionsand duties of the Transition Agency. These additionalfunctions and duties relate to waste management andminimisation planning and services.

In particular, the Transition Agency is required to:

Oversee the work, if any, of existing local authorities inthe preparation for the first waste assessment that theAuckland Council will make under section 50(2) of theWaste Minimisation Act 2008;

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Oversee the preparation of detailed proposals forachieving long-term integrated waste management andminimisation planning and services in Auckland(including proposals for managing waste contracts,leases, and other arrangements in relation to waste;and

Prepare options on these matters for consideration bythe Auckland Council.

TPI submits that in fulfilling its new duties under clause11(2)(cb)(ii), the Transition Agency should be required toengage and consult with:

commercial providers of waste management services;and

waste generators. (This could be done, for instance,through consultation with organisations such as theEmployers and Manufacturers Association and thePackaging Council.)

The Transition Agencys role of overseeing preparation ofproposals for integrated waste management andminimisation planning and services in Auckland, anddeveloping options on these matters, provides anopportunity for key industry stakeholders to assist in thedevelopment of a range of options for the AucklandCouncils consideration.

In TPIs experience, a number of local authorities, have notengaged or consulted with the waste industry whendeveloping strategies for the management of waste in theirdistricts or when preparing Waste Management andMinimisation Plans. Consequently, they are often notaware of the range of waste minimisation activities andinitiatives initiated by the private sector or the extent towhich these initiatives already promote effective andefficient waste management and minimisation. An exampleof this is the recent Waiheke Island kerbside collection andrefuse transfer station contract, where services have beenenhanced resulting in the range and volume of materialsdiverted from landfill having increased and the collection

systems have been enhanced to accommodate communityneeds.

If the Transition Agency were to consult with commercialproviders of waste management services and producers toassist it with the preparation of options for the AucklandCouncils consideration, this would inevitably assist with theaim of achieving long-term integrated waste managementand minimisation planning and services in the AucklandRegion.

Looking beyond 1 November 2010, this would also assist

Auckland Council in fulfilling its statutory responsibility

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under section 42 of the Waste Minimisation Act 2008, topromote effective and efficient waste management andminimisation within Auckland.

Bylaws about waste9

Under clause 93(4) of the Bill, the Auckland Council isrequired to review each bylaw about waste and confirm,amend or revoke it before the earlier of, the date by whichthe Council is required to review the bylaw under section158 or 159 of the Local Government Act 2002, or the closeof 30 June 2012.

TPI supports the inclusion of a statutory deadline for thereview of waste bylaws. It is noted that the date of 30June 2012 aligns with the requirement for the AucklandCouncil to review its Waste Management and MinimisationPlan by 1 July 2012, which seems sensible.

It would be appropriate for there to be some transitionalprovisions in the reviewed Auckland Council waste bylawsto enable a reasonable lead-in time for the wastemanagement industry to respond and adjust theirpractices, so as to ensure compliance with the new bylaws.Transpacific will consider seeking such provisions as part ofthe bylaw review process in due course.

Moratorium on sale

of Auckland Counciland council-

controlledorganisation

property

10 Clause 62 of the Bill proposes to restrict the AucklandCouncil or any council-controlled organisation (CCO) ofAuckland Council from selling, transferring, or otherwise

disposing of shareholdings in any company, land orbuildings currently used or designated for service deliverypurposes or any other land or buildings with a currentrating valuation of $250,000. This moratorium is set toapply until 1 July 2012.

While clause 62(2) of the Bill sets out some exceptions tothis moratorium, TPI is concerned about the potentiallybroad application of this restriction.

The moratorium applies to any CCO of Auckland Council i.e.a new CCO as of 1 November 2010, but is not limited towholly owned CCOs. The restrictions in clause 62 apply

until 1 July 2012 which is effectively a year and a half afterthe Auckland Council is established.

Current proposals for Auckland Council CCOs that havebeen developed by the Auckland Transition Agency, includeWDS as part of a new CCO named Property Holdings andDevelopment. While further consultation on the proposedCCO structure is yet to occur, in the event that WDS isincluded within a new Auckland Council CCO, TPI isconcerned that clause 62 may unreasonably restrict WDSability, as a public-private partnership, to dispose or sellproperty.

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For example, there may be situations where there havebeen lengthy negotiations undertaken by a current CCO todispose of property, but the disposal has not occurred priorto 1 November 2010, and the statutory exemptions to themoratorium do not apply. In these circumstances, themoratorium could effectively result in the transaction not

going ahead at all.

The restriction would also encompass initiatives designedsolely for restructuring purposes or to exchange land toenable more efficient development and utilisation of thelandfill

It is submitted that if there is to be a moratorium on thesale of property up to 1 July 2012, it should only applywhere the CCO is wholly owned by the Auckland Council.

Schedule Details ofTPI s activities in NZand the Auckland

Region

11 TPI has a wide network of operations include collectionoperations, municipal contracts, transfer stations, landfill

operations, waste-to-energy sites, composting facilities,

recycling plants and liquid and hazardous waste treatment.

In New Zealand, TPI has over 2000 (contracted and

employed) staff throughout New Zealand and has made

significant capital investments in the New Zealand waste

industry infrastructure. TPI has interests in numerous

transfer stations, green waste and bio-solids processing

facilities, recycling plants and landfills across the country.

TPI through its solid waste division, WasteManagement, has considerable experience inwaste collection, waste treatment, organic andinorganic recycling, waste disposal, bio-wastemanagement, landfill gas to energy technology,construction and operation of waste facilities andcontaminated site remediation.

TPI through Transpacific AllBrite Ltd provides arange of resource recovery and recycling servicesfor a wide range of materials that may otherwise bedisposed of in landfills.

TPI through Transpacific Technical Services(N.Z.) Ltd also has significant investment in liquidand hazardous waste collection and processing -including medical waste.

TPI through its Transpacific Industrial Solutionsoperating division provides a wide range ofindustrial services including high pressure waterblasting, road sweeping, CCTV drainage servicesand maintenance, local council sewer & stormwatermaintenance, industrial plant shutdowns and facilitymanagement services.

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TPI through its subsidiary ERS New Zealand Ltd provides a range of integrated collection/recyclingservices for parts washers, oil filters and otherhazardous waste from industrial workplaces, and forthe collection and treatment of waste cooking oilsand fats, and for the collection and recycling of

waste hydrocarbon oils including ships sludges.

A significant portion of TPIs operating divisions and

investments are located in the greater Auckland region.

TPI, across its various business units provides services, or

is a significant operator in all of the Councils affected by

the move to a new amalgamated Auckland City under the

legislation currently being proposed.

Particular points of TPIs interaction with the local councils

are:

Waste Disposal Services (WDS) an unincorporatedJV between TPI & Manukau City Council (MCC). ThisJV is a 50/50 partnership in the Whitford Landfilland East Tamaki Refuse Transfer Station.

10 year collection and Refuse Transfer Station(BOOT) contract for Waiheke Island with AucklandCity Council (ACC).

Disposal agreement with ACC for solid wastedisposal at TPIs Redvale Landfill in the Rodney

District.

Disposal agreement with Waitakere City Council(WCC) for solid waste disposal at TPIs RedvaleLandfill in the Rodney District. There is a relatedagreement between TPI and WCC which providesfor tolling of TPI waste through WCCs transferstation.

Disposal agreement with the North Shore CityCouncil (NSCC) for solid waste disposal at TPIsRedvale Landfill in the Rodney District.

Transport & Disposal agreements with variousentities for bio-solid disposal at the Redvale Landfill.

Kerbside refuse collection and disposal contract withPapakura District Council (PDC).

Kerbside recycling collection, sorting and processingcontract with Franklin District Council (FDC).

Arrangements with the Auckland Regional Council(ARC) for the disposal of material collected byHazmobiles operated by the ARC throughout theregion.

8

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Submission on behalf of Oi New Zealand to the Auckland Governance LegislationCommittee

Dated: 12 February 2010

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SUBMISSION ON BEHALF OFO1NEW ZEALAND TO THE AUCKLANDGOVERNANCE LEGISLATION COMMITTEE

/To: The Auckland Governance Legislation CommitteeSubmitter: O1 New Zealand

EXECUTIVE SUMMARY

2

O1 New Zealand (01 NZ) is New Zealand's leading supplier of glasspackaging and is the only glass recycling operation in the country. OI NZ is amajor supplier to the New Zealand food and beverage industries and has beeninstrumental to the international success of these industries for upward of 85years. O1 NZ's Auckland plant employs 217 people and plays an integral rolein diverting Auckland's glass from the waste stream.OI NZ wishes to appear before the Select Committee to discuss itssubmission.In general,Ol NZ supports the Local Government (Auckland Law Reform) Bill(Bill), but there is one issue upon which it wishes to make a submission. Insummary, O1 NZ wishes to comment on clause 11(2)(cb) of the Bill, whichexpands the role of the Auckland Transition Agency (A TA) to oversee thepreparation of waste management and minimisation options for the AucklandCouncil's consideration.

4 The ATA's role of overseeing preparation of proposals for integrated wastemanagement and minimisation planning and services in Auckland, anddeveloping options for these matters, provides a unique opportunity for keyindustry stakeholders to assist in the development of a range of innovativeoptions for the Auckland Council's consideration.OI NZ considers that the current assets and arrangements'for Auckland'swaste could be restructured in such a way that would be hugely beneficial forthe Auckland Region's waste minimisation targets under the WasteMinimisation Act 2008.

6 It is submitted that in fulfilling its new duties under clause 11(2)(cb)(ii) of theBill, the ATA should therefore be required to engage and consult with thosecommercial operators that are involved in waste management services andmajor recycling operations.

ll INTRODUCTION

7 This submission is made on behalf ofO1 NZ.8 OI NZ wishes to appear before the Committee to speak to its submission. OINZ's contact details are:

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Brian SlingsbyO1 New ZealandPO Box 12345PenroseAuckland 1642

IlIl

Phone: 09 976 7117Email: [email protected]

10

11

OI NZ is New Zealand's and the world's leading supplier of glass packaging.Until late 2004, O1 NZ was well known in New Zealand as ACI (AustralianConsolidated Industries).OI NZ is a major supplier to the New Zealand foodand beverage industries and instrumental to the international success of theseindustries for upward of 85 years. O1 NZ's Auckland plant employs 217people.O1 NZ is the only recycler of glass in New Zealand. In 2008, O1 NZ recycled84,000 tonnes of glass, thereby removing a significant amount of waste fromNew Zealand's waste stream that would otherwise go to landfill. Packagingmanufactured by OI NZ has an average recycled glass content of 65%.OI NZ is investing $80rn in a new furnace for its plant in Auckland.Construction of the furnace has commenced and it is expected to beoperational by the end of July 2010. Key benefits of the new furnace willinclude:

12

11.1 creating around 38 new local jobs;11.2 using the latest technology providing energy reduction opportunities,

as well as light weight bottle production;11,3 having the capacity to utilise an additional 70,000 tonnes of recycledglass per annum, adding to the 84,000 tonnes per annum currentlyrecycled and utilised in the process; and11.4 ensuring that, where possible, local suppliers and labour are used forthis project (current estimate is that this is worth approximately $40million to Auckland's economy).In addition to reducing the amount of glass that would otherwise go to landfill,the use of recycled glass in the O1 glass manufacturing processes alsoreduces CO2 emissions. The use of recycled materials in its manufacturingprocesses requires less energy than a process using virgin raw materials, thusreducing CO2 emissions (because less soda ash and limestone needs to bemetted, therefore reducing the release of CO2 from the melting process).

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13

14

15

16

Ihe nationwide mindshift to embrace recycling glass has been tremendous,but O1 NZ has real concerns with the approaches taken by existing Aucklandlocal authorities to recycling.Under section 42 of the Waste Minimisation Act 2008, territorial authoritieshave a responsibility to promote effective and efficient waste management andminimisation within their respective districts. Territorial authorities are requiredunder section 43 of that Act to adopt waste management and minimisationplans. These plans must provide for objectives, policies, and methods forachieving effective and efficient waste management andminimisation,including collection, recovery, recycling, treatment and disposal services tomeet the district's current and future needs (section 43(2) Waste MinimisationAct 2008).Four of the seven Auckland territorial authorities have entered into commercialcontracts for the commingling of recyclables.' In Auckland, comminglinginvolves the collection of recyclable materials (glass, paper, plastics,aluminium, metals) in one bin. This material is then compacted in thecollection and transporting process and taken to a sorting plant. When glassis compacted on collection (to achieve transport efficiency), it often breaks,resulting in different colours of glass being mixed together, along with otherrecyclable materials. While the glass is sorted at the materials recoveryfacility (Visy), this process is not as precise as the previous system of manualsorting of glass by colour on collection. The commingling system results in thecontamination of glass by colour, noncontainer glass items and generalwaste. To make clear glass, only clear glass cullet (recycled glass) can beused. Therefore, where colour contamination has occurred, the glass culletcannot be used by the O1 NZ plant, and because it cannot be recycled, theglass is likely to be diverted to landfill.Due to recent changes in the collection of recyclables, there is now a largeamount of glass that could and should be recycled, sitting in a pile atOnehunga. There is a possibility that this glass could be used as anaggregate replacement (which does not result in the CO2 benefits associatedwith using cullet in glass manufacturing, versus rawmaterials as explained inparagraph 12 above), but the most likely next stop for this large pile ofcontaminated glass is the landfill. Prior to commingling, the crate systemresulted in approximately 2% of collected glass going to landfill.2 Now, withthe use of commingling,Ol's global experiences indicate that between 30 and50% of collected glass cannot be used in the glass container manufacturingprocess currently.

Auckland City Council and Manukau City Council jointly entered into a contract forcommingling with Visy on 1 July 2008. NorthShore City Council andWaitakere City Counciljointly entered into a contract with Onyx in mid 2005.OI NZ receives colour sorted kerbside collection volumes from the rest of the country andapproximately 2% of this cullet is not able to be reused.

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17

18

19

In addition to an increase in glass going to landfill, the reduction in the amountof recycled glass being suitable for use at the OI NZ plant means that theplant's carbon emissions will inevitably increase. As a result, this does notmeet the Government's aspirations of lowering carbon emissions through theEmissions Trading Scheme.O1 NZ views commingling as being a "waste" model (i.e. collect the waste,and deal with it), rather than a "recovery" model, which would involve a modelwhere recyclables are collected with the intention of producing a high qualityend product (with commercial value) for the recycling market.From 1 November 2010, decisions as to how Auckland's waste will becollected and dealt with will pass to the new Auckland Council. Clause 109(4)of the Bill requires the Auckland Council to review the existing Auckland wastemanagement and minimisation plans by 30 June 2012, which is consistentwith the 1 July 2012 deadline to review these plans under section 50(1) of theWaste Minimisation Act 2008.

20

IV

O1 NZ is concerned that looking forward from 1 November 2010, thecommingling of recyclables will not ultimately achieve effective and efficientwaste minimisation for Auckland, as required by the Waste Minimisation Act2008, and is not a sustainable option for Auckland's future.ROLE OF ATA

21

22

Clause 11(2)(cb) of the Bill proposes to amend section 13 of the LocalGovernment (Tamaki Makaurau Reorganisation) Act 2009, inserting additionalfunctions and duties of the ATA. These additional functions and duties relateto waste management and minimisation planning and services.In particular, during the transition period (up to 1 November 2010), the ATA isrequired under clause 11(2)(cb) to:22.1

22.2

22,3

Oversee the work, if any, of existing local authorities in the preparationfor the first waste assessment that the Auckland Council will makeunder section 50(2) of the Waste Minimisation Act 2008;Oversee the preparation by existing local authorities of detailedproposals for achieving longterm integrated waste management andminimisation planning and services in Auckland (including anyproposals for managing waste contracts, leases, and otherarrangements in relation to waste); andPrepare options on these matters for consideration by the AucklandCouncil.

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23 OI NZ understands that over the past few months, the ATA has been workingon options for a waste strategy that will be considered by the new AucklandCouncil.

24 OI NZ first approached and met with the ATA's waste consultant on10 November 2009. At that meeting, O1 NZ discussed issues relevant to therecycling of glass and the problems created by commingling. It was at thismeeting that O1 NZ learned that the ATA was developing a waste strategy. Atno stage has the ATA discussed this strategy with O1 NZ.

25 Since the November 2009 meeting, O1 NZ has attempted on a number ofoccasions to engage further with the ATA to discuss both the followup on theNovember meeting and to discuss the waste strategy, but the ATA has notappeared willing to do so.

26 The ATAs role of overseeing preparation of proposals for integrated wastemanagement and minimisation planning and services in Auckland, anddeveloping options on these matters, provides a unique opportunity for keyindustry stakeholders to assist in the development of a range of innovativeoptions for the Auckland Council's consideration.

27 In addition to territorial authorities, industry plays a critical role in wastemanagement and minimisation, particularly with regard to recycling. It isimportant that the ATA properly understands the impact of the economics ofrecycling and the impact that current commingling practices have on recyclingglass.

28 OI NZ considers that current assets and arrangements regarding Auckland'swaste could be restructured in such a way that would be hugely beneficial forthe Auckland Region's waste minimisation targets. If the ATA and theAuckland Council do not review Auckland's recycling strategy in line with bestpractice methodology, the consequences for Auckland will be significant, asevident in other countries, such as Australia, Great Britain, and the USA.29

30

Given the reluctance of the ATA to properly engage with key industrystakeholders,Ol NZ considers it essential that the ATA be required toundertake this consultation in developing the waste proposals to be submittedto the Auckland Council. Such consultation will assist the ATA, and post1 November 2010, the Auckland Council, to take a more visionary approach toachieving longterm integrated waste management and minimisation inAuckland, by taking into account the role of private industry and the impact ofcommingling collection practices on the recycling market.Therefore, it is submitted that in fulfilling its new duties under clause11(2)(cb)(ii) of the Bill, the ATA should be required to engage and consult withthose commercial operators that are involved in waste management servicesand major recycling operations.

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01 New ZealandContact details:

IBrian SlingsbyPOBox 12345PenroseAuckland 1642Phone: 09 976 7117Email: [email protected]

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February 2010Subinission to:

REC:E"IV EDi1 5 FEB 2010

IAuckland Govem .anceL'_kegiganotCommittee J

The Auckland Governance Legislation Committee

on the:

Local Government (Auckland Law Refonn) Bill


Living Earth Ltd (LEL), Captain Springs Rd, Te Papa, Auckland

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LEL wishes to appear before the committee to speak to its submission.In particular LELwishes to comment on Part 1.11 of the Bill which addresses thefunctions and duties of the Transition Agency with regard to governance of solidwaste by Auckland Council. In summary LEL's position is:The Bill should be amended to provide for Auckland Council the potentialconsolidation of the solid waste assets, such as a regional organic waste processingfacility, into a Council Controlled Organisation rather than a business unit as the Billpresently envisages.

Executive summaryThe establishment of Auckland Council provides an opportunity to reconfigure the controland governance of solid waste infrastructure in Auckland.The main driver for the Council is to meet or exceed the objectives of the WasteMinimisation Act 2008 and the associated NZWaste Strategy which set targets and prioritiesfor local government.Diverting organic waste from landfills is a top priority. Food and garden waste representsabout 50% of total waste to landfill; when landfiUed it creates greenhouse gas emissions; andbecomes a economicaUy valuable product when converted to compost.Success in waste minimisation and resource recovery is a critical element of the newCouncil's ambition to be world class city.In LEL's submission, the management of regional solid waste issues should not be dealt within a piecemeal way. A separate, dedicated COO recommended to be set up to plan andmanage regional solid waste matters, including existing JVs, contracts and otherarrangements for waste including to facilitate the development of a regional organic wasteprocessing facilit'.

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The amendment to the Local Government (Auckland Law Reform) Bill to enable thecreation of a PPP does not commit the ATA or Auckland Council to such a course. It doeshowever provide the new council with the necessary legal instrument to get on with it. Suchan opportunity to create the appropriate legislative settings is unlikely to present itself again.

BackgroundThe 2009 Royal Commission on Auckland Governance report noted there is need for aregional approach to separation of organic waste from the general waste stream. Organicwaste could have a number of end uses including composting and biofuel production. TheCommission believes that opportunities like these are not being fully considered because ofthe fragmented approach of the current governance system. An allofAuckland approach isrequired to implement these kinds of proposals, because they need to be founded on acombined waste stream, capital investment, and a public education campaign to supportseparate organic collection.

For many years various councils within Auckland region have investigated the need toenhance organic waste processing in the region by diverting food waste from the landfillWaste Stream.The drivers for this are:

New Zealand commitments to reduce green house gas emissions. Organic waste isthe material which creates landfill gas or methane.

The Waste Minimisation Act which seeks to reduce waste to landfill Largescale compost production will enhance the productivity of soils forcommercial food production in the Auckland region.

Auckland wishes to be seen as a high performing world class city.However no initiatives resulted because councils could not agree on a united approach. In2008/09 a group of waste managers representing the councils jointly funded a study fora

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regional organic waste processing facility and the Auckland Regional Council completedaWaste Assessment report in 2009. Both reports conclude the development of a regionalorganic waste processing facility is a priority for the region.This is in line with the objectives of the Waste Minimisation Act and the NZWaste Strategyand Targets which identify organic waste diversion from landfill as the highest nationalpnont'.

Options for organic waste processing in Auckland.Auckland Council will have several options for facilitating organic waste processing onregional scale. The options range from an arms length tender process to a PPP betweenAuckland Council and the private sector.The facility will be capital intensive with a long term operating arrangement and potentialcommercial risk around sustaining demand for finished product whether it be compost orbiofuel.LEL believes these factors would be best addressed by a Council Controlled Organisationwith a board of appointed directors.Part 1.11 of the Bill calls on the ATA to oversee the preparation by the existing localauthorities of detailed proposals for achieving longterm integrated waste inanagement andminimisation planning and services in Auckland.It is likely these detailed proposals will highlight the need for urgency to develop a regionalorganic waste processing facility in line with the NZWaste Strategy and Targets. Howeverthe Bill makes no provision for ensuring Auckland Council has an appropriate governancevehicle the City will need to set in place the ownership, operations and governance of suchafacility.The bill envisages Auckland Council managing solid waste activities through a business unit.LEL does not believe this is the most appropriate governance model Auckland needs to

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achieve higher performance in solid waste minimisation. Accountability for improvedperformance is more likely to be achieved though a CCO with appointed directors.

AucklandWaste Stocktake & Strategic Assessment 2009The Auckland Regional Council's Technical Report No.107 (October 2009) Auckland WasteStocktake & Strategic Assessment 2009 reported that organic waste, in particular foodwaste, is the largest remaining fraction of the domestic collected waste that has not yet beensuccessfully targeted for diversion by Auckland. In addition, there are still significantquantities of organic material from commercial sources that could be diverted and put tobeneficial use.There has been a major body of workundertaken by the territorial authorities toaddress both the household and commercial streams. The Auckland Waste OfficersForum, Organic Waste Working Group has undertaken work on technology options formanaging organic waste and organic waste collection from households.The report also acknowledged the current model is not ideal for the Auckland region as theprivate sector has a different set of imperatives to the public sector. For example it notesthat at present there is insufficient commercial incentive for privatel'owned facilities toinvest in maximising resource recovery from solid waste streams.

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ObservationsLEL's observations in respect of this Bill are that:If the Auckland Council is to meet the requirements of the WMA to complete its WMMP by2010, progress will need to be made over the current transition period. The LocalGovernment (Auckland Law Reform) Bill calls on the ATA to work with the existingcouncils of the Auckland region over the coming months so that a review of waste plans andoptions for a new WMMP can be provided to the incoming Auckland Council forconsideration and approval within 6 months of its establishment.LEL understands that the ATA is taking expert advice on design options for solid wasteinfrastructure for the new council to ensure Auckland's performance under the WMA andNZ Waste Strategy which highlights the priority of an organic waste processing facility forAuckland.

Under the provisions of the Bill ATA can also have discussions with the industry on theviability of different options for the ownership and governance of solid waste assets in theregion.

It is anticipated that the outcome of these investigations by the ATA will be to recommendthat diversion of organic waste from landfill is a priority for Auckland Council.If the new Auckland Council is to consider the establishment of a different working modelfor solid waste in the region it will need to engage with private industry which may give riseto Commerce Act 1986 issues described above.

Legislative recommendationsFor the above reasons LEL seeks a new section to be inserted by clause 19C of the Bill asfollows:

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19C Establishment of Auckland waste services agency(1) The Transition Agency must establish a councilcontrolled organisation for AucklandCouncil, to be known as the Waste Services Agency, with responsibility for coordinatingsolid waste services in Auckland.(2) For the purpose of performing its functions, the Waste Services Agency may enter,carry on or undertake any activity or business, do any act, or enter into any transaction orarrangement. For the avoidance of doubt, this includes joint ventures, public privatepartnerships or any other arrangements with private entities.(3) Nothing in sections 27, 29 or 30 or in Part 3 of the Commerce Act 1986 shall applyto or in respect of(a) or any contract, arrangement, or understanding between the Waste Services Agencypursuant to (2) above and one or more private entities, for the purpose of coordinatingsolid waste services in Auckland; or(b) The negotiation of any contract, arrangement, or understanding so far as it containsaprovision relating to the formation of any activity or business described in (3)(a).(4) Section 35G applies to the establishment of the organisation as if the organisationwere an organisation recommended to be established under that section.If the suggested clause 19C above is not to be enacted then, as an alternative, the followingalternate clause 19C, should be enacted19C Application of Commerce Act 1986(1) Nothing in sections 27, 29 or 30 or in Part 3 of the Commerce Act 1986 shall applyto or in respect of(a) Any contract, arrangement, or understanding between the Auckland Council or councilcontrolled organisation and one or more private entities for the purpose of coordinatingsolid waste services in Auckland. For the avoidance of doubt, this includes joint ventures,public private partnerships or any other arrangements with private entities; or

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(b) The negotiation of any contract, arrangement, or understanding so far as it containsaprovision relating to the formation of any activity or business described in (1)(a).

Living Earth Ltd

For 15 years LEL has been Auckland's principal regional organic waste processor. Thecompany also built and operates New Zealand's largest food waste composting facility withChristchurch City Council.The company is a joint venture between Transpacific Industries Group (NZ) Ltd and ForteInvestments 2004 Limited.LEL currently provides a garden waste composting facility for the residents of Aucklandregion, a facility which operates on a market model without contractual arrangements orsubsidies with local government. Living Earth has diverted more than 2 million tonnes ofmaterial from the nation's landfills, converting it into high quality compost.

LEL has led a number of national studies that have proven the value of compost to NewZealand's productive soils. Compost not only improves productivity, it also reduces the needfor commercial growers to apply highly nitrogenous and synthetic fertilizers to their soilsresulting in enhanced groundwater and runoff.

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February 2010

Submission to:

The Auckland Governance Legislation Committee

on the:

Local Government (Auckland Law Reform) Bill


Rob Fenwick CNZM, Te Matuku, RD1 Orapiu Rd, Waiheke Island, Auckland

I wish to appear before the committee to speak to my submission.

In particular I wish to comment on Part 1.11 of the Bill which addresses the

functions and duties of the Transition Agency with regard to governance of solid

waste by Auckland Council. In summary my submission is:

The Bill should be amended to:

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a. provide for Auckland Council the potential consolidation of the solid waste

assets into a Council Controlled Organisation rather than a business unit as the

Bill presently envisages.

b. grant Commerce Act exemption to enable the formation of a Public Private

Partnership (PPP) between Auckland Council and private landfill owners to

control the regions waste disposal functions. This would deliver waste disposal

pricing in the region which captured externalities and provided a realistic

threshold under which resource recovery activities such as organic waste

processing, would be viable.

Introduction

While this is a personal submission, I have a number of roles, present and past in

the resource recovery and solid waste sectors.

Current chairman of the Waste Advisory Board established under the

Waste Minimisation Act 2008.

Former f

member of the Government working party to develop the Waste

Minimisation Act 2008.

Former member of the Government Working Party to develop a National

Waste Strategy 2000, a precursor to the legislation.

Founding shareholder and director of Living Earth Ltd, New Zealandsprincipal organic waste and composting company.

Former chairman of the Auckland Regional Council Solid Waste Steering

Group 1990.

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Member of Auckland City Council Vision Reference Group 1999.

Current Founding shareholder of the Stone Paper Company, the NZ and

Australian distributors of Rockstock paper manufactured from waste

construction material.

Co-Founder of the NZ Business Council for Sustainable Development

Current director carboNZero

Former chairman Landcare Research

Executive summaryThe Government is committed to reducing waste to landfill. The cross party

support for the Waste Minimisation Act 2008 illustrates universal

endorsement of New Zealands intent to reduce waste.

Reduction of waste aligns with other national strategies including reducing cost to

families and businesses; inspiring innovation; reducing GHG emissions;enhancing water quality and promoting energy efficiency.

The Auckland Region produces more waste than any other region in New

Zealand, and proportionally more per capita than most. Improving Aucklands

waste minimisation performance would significantly enhance New Zealands

overall performance.

The establishment of Auckland Council provides a unique opportunity to

reconfigure the control and governance of solid waste infrastructure in Auckland

to achieve the objectives of the WMA 2008, and deliver on Aucklands ambition

to be a world class city.

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This Bill should be configured to provide the new council with the necessary

levers for this to happen. This is in line with other regions of New Zealand such

as Canterbury where solid waste infrastructure has been designed to minimize

waste to landfill through partnerships between public and private sectors and a

forward looking focus on price signals, operational efficiency and governance.

In my submission, this enabling legislation should be amended to provide:

The formation of a Solid Waste CCO so it may enter into a PPP or other

commercial relationships to facilitate resource recovery and recycling

initiatives such as a regional organic waste processing facility, thus

accelerating waste minimisation in the new city in line with the WMA 2008

Commerce Act exemption so the ATA can enter discussions with industry

participants

In my submission, the management of regional solid waste issues should not be

dealt with in a piece-meal way. A separate, dedicated CCO should be set up to

plan and manage regional solid waste matters, including existing JVs, contracts

and other arrangements for waste.

The amendment to the Local Government (Auckland Law Reform) Bill to enable

the creation of a PPP does not commit the ATA or Auckland Council to such a

course. It does however provide the new council with the necessary legal

instrument to get on with it. Such an opportunity to create the appropriate

legislative settings is unlikely to present itself again.

Background

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Auckland region disposes more than 1 million tonnes per annum of waste to

landfills. A sustainable reduction in Aucklands waste disposal would result in a

significant improvement in the countrys waste minimisation targets.

There are several impediments to waste ministration in Auckland:

o Market competition between two private landfill owners is producing

pricing thresholds that do not capture the external environmental

costs of disposal. For as long as this trend continues it will

undermine the aims of the WMA.

o Misaligned commercial relationships between Aucklands 11

transfer stations and the landfills resulting in significant haul cost

wastage and traffic congestion.

o Misaligned priorities for waste minimisation and resource recovery

such as a regional organic waste processing facility, across the

region leading to a piece meal and uncoordinated approach and the

absence of a regional strategy.

Landfill disposal price drives waste minimisation and sustainable resource

recovery and recycling. The average landfill disposal price in Auckland

Region is about $60 per tonne and resource recovery struggles to be viable.

In Christchurch where the councils and the private sector jointly own the Kate

Valley Landfill the disposal price is more than $120 per tonne more accurately

reflecting the true environmental cost of disposal.

The disposal price in Auckland is driven down by market competition between

two large private landfill owners.

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However landfill companies may be open to a model similar to Canterbury.

The new Auckland Council could negotiate a public private partnership with

the two companies which would acquire control of the airspace in their

landfills and guarantee them a certain commercial return under some NPV

purchase arrangement.

Auckland has 11 transfer stations, each with a different ownership structure

and a commercial relationship with a different landfill operator. This results in

significant haul wastage and traffic congestion across the region. There is

scope for rationalising the number of transfer stations and better aligning

landfill disposal arrangements.

Various independent reports have highlighted this issue, including the 2009

Royal Commission on Auckland Governance report, which noted that there

would be considerable scope for improving Aucklands solid waste minimisation

performance through the co-ordination and integration of the regions solid waste

management functions.

Without solid waste diversion, consumption of available landfill air space will

continue unabated. This may well expedite the need for a replacement Auckland

landfill with the associated consenting issues and construction costs and amenity

concerns.

Specific issues and recommendations

1. Addressing inefficiencies in solid waste management and disposal in

Auckland.

2. Addressing the objectives of the Waste Minimisation Act 2008

3. Some specific opportunities for the new Council, including diverting large

volume waste streams from landfill

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4. The pathway to implementation.

1. Addressing inefficiencies in solid waste management and disposal in

Auckland.

The Auckland Regional Council's Technical Report No.107 (October 2009)

Auckland Waste Stocktake & Strategic Assessment 2009concludes the current

model for managing solid waste is not ideal for the Auckland region as the private

sector owners of disposal facilities, Landfills, have different objectives to those of

the Waste Minimisation Act 2008. There are certain public goods that are not

provided for under the current model:

Increasing solid waste diversion: private sector landfill

operators have a natural driver to secure as much solid

waste tonnage as possible to fill up landfills and repay

investment;

Resource recovery: At present there is insufficient

commercial incentive for privately-owned facilities to invest in

maximising resource recovery from solid waste streams;

Collection and transfer efficiencies: solid waste is not hauled

in the most efficient way in Auckland as private operators are

currently incentivised to use their own landfills and transfer

stations. This results in additional traffic congestion and

greenhouse emissions as well as leading to increased

collection costs.

Furthermore Auckland has 11 transfer stations, each with a different

ownership structure and a commercial relationship with a different landfill

operator. This is the result of legacy contractual arrangements between the

seven local councils and transfer stations and landfill owners.

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This results in significant wastage in waste haul costs and traffic congestion

across the region.

There is scope for rationalising the number of transfer stations and better

aligning landfill disposal arrangements which would result in a dramatic

reduction in cost to Auckland ratepayers. Waitakere City estimates the current

978,000 truck movements per annum could be reduced by 14% minimum

producing a saving of $23 million per annum.

The best business model to oversee this rationalisation would be a CCO.

2. The Waste Minimisation Act 2008 and NZ Waste Strategy and Targets

The objective of the WMA and the associated NZ Waste Strategy and Targets, is

to reduce the volume of waste to landfill and promote sustainable resource use

and resource recovery.

The facilitate these objectives a waste levy has been introduced with the levy

revenue hypothecated to support recourse recovery and recycling initiatives. TheAct also enables product stewardship regulations and mandatory data recovery.

Under the WMA all local councils are required to a Waste Minimisation Plan with

clear targets for reducing waste volumes to landfill. These targets should reflect

the NZ Waste Strategy and Target schedule produced by the Ministry for

Environment.

Auckland Council is required to produce a Waste Minimisation Plan (WMMP)

with clear targets for reducing volumes of waste to landfill within a few months of

its creation.

3. Some specific opportunities for the new Council, including diverting

large volume organic waste streams from landfill

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Diversion of organic waste from landfill is a principal target under the NZ Waste

Strategy.

The 2009 Royal Commission on Auckland Governance report noted there is

need for a regional approach to separation of organic waste from the general

waste stream. Organic waste could have a number of end uses including

composting and biofuel production. The Commission believes that opportunities

like these are not being fully considered because of the fragmented approach of

the current governance system. An all-of-Auckland approach is required to

implement these kinds of proposals, because they need to be founded on a

combined waste stream, capital investment, and a public education campaign to

support separate organic collection.

The background to this is that for many years, various councils within Auckland

region have investigated the need to enhance organic waste processing in the

region by diverting food waste from the landfill waste stream.

The drivers for this are:

New Zealand commitments to reduce green house gas emissions.

Organic waste is the material which creates landfill gas or methane.

The Waste Minimisation Act which seeks to reduce waste to landfill

Large-scale compost production will enhance the productivity of soils for

commercial food production in the Auckland region.

Auckland wishes to be seen as a high performing world class city.

However no initiatives resulted because councils could not agree on a united

approach. In 2008/09 a group of waste managers representing the councils

jointly funded a study for a regional organic waste processing facility and the

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Auckland Regional Council completed a Waste Assessment report in 2009. Both

reports conclude the development of a regional organic waste processing facility

is a priority for the region.

This is in line with the objectives of the Waste Minimisation Act and the NZ

Waste Strategy and Targets which identify organic waste diversion from landfill

as the highest national priority.

Cost is a key issue. In Canterbury, where Living Earth operates a state-of the art

food waste composting facility with Christchurch City Council, organic waste

processing is about the same cost as landfill disposal. In Auckland landfill pricing

is as an artificially low threshold due to the competitive market dynamic in the

region. This is not sustainable and will accelerate the need for more landfill air

space with associated consenting issues and construction costs.

Auckland Council will have several options for facilitating organic waste

processing on a regional scale. The options range from an arms length tender

process to a PPP between Auckland Council and the private sector.

The facility will be capital intensive with a long term operating arrangement and

potential commercial risk around sustaining demand for finished product if a

composting option is pursued.

I believe these factors would be best addressed by a Council Controlled

Organisation with an board of appointed directors.

4. The pathway to implementation.

Part 1.11 of the Bill calls on the ATA to oversee the preparation by the existing

local authorities of detailed proposals for achieving long-term integrated waste

management and minimisation planning and services in Auckland.

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The bill envisages Auckland Council managing its solid waste activities through a

business unit. I do not believe this is the most appropriate governance model.

Auckland needs to achieve higher performance in solid waste minimisation.

Accountability for improved performance is more likely to be achieved though a

CCO with an independent board.

It is likely the ATAs detailed proposals will highlight the need for urgency to

develop a regional organic waste processing facility. However the Bill makes no

provision for ensuring Auckland Council has an appropriate governance vehicle

the City will need to potentially own, operate and govern such a facility.

Formation of Waste Services Agency

I recommend the Bill be amended to expressly establish a CCO of the Auckland

Council in relation to solid waste functions. The objective of this CCO would be

to undertake its functions in a way that contributes to affordable, integrated, and

sustainable solid waste services in Auckland.

This new CCO, in addition to having the full capacity to carry on or undertake any

activity or any business to achieve its objectives and functions, would be

expressly enabled to enter into such arrangements as JVs or PPPs to facilitate

organic waste processing functions.

The Bill clearly envisages that Auckland will achieve long-term integrated solid

waste management and minimisation planning and services. This is made clear

by clause 11, which proposes to amend section 13(1) of the Tamaki Makaurau

Act by inserting a new subsection (cb)(ii) requiring the ATA to oversee the

preparation by existing local authorities of detailed proposals for achieving long-

term integrated waste management planning, including proposals for managing

waste contracts, leases and other arrangements.

I recommend the Bill should go further, and provide clear direction to the ATA or

the Auckland Council to establish a CCO in relation to solid waste management

in Auckland. CCOs provide a mechanism by which the benefits generally

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13

These impediments can be remedied in the legislation to create Auckland

Council.

The model developed in Canterbury and in other cities around the world,

involving PPPs between public and private sectors, are demonstrably successful.

There is a unique opportunity to establish such a model in Auckland. It requires

enabling legislation to overcome Commerce Commission issues and create the

appropriate governance structure within the new Council.

It is most unlikely that such an opportunity will be repeated within the foreseeable

future.

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CORRESPONDENCE AND INITIAL MEETING MINUTES

BETWEEN THE COUNCIL/ ATA AND TRANSPACIFIC INDUSTRIES

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Date; 13 July 2010Time; 1.30 pmLocation; ATA offices

Waste consultation meeting between Transpacific Industries Ltd (TPI) and theAuckland Transition Agency (ATA)Minutes of meeting.

Tom Nichols Managing Director TPIIan Kennedy Special Projects Manager TPIJohn Dragicevich Manager Infrastructure and Environmental Services, Auckland CouncilKerry Connolly ATA Infrastructure and Environmental Services Work stream leaderJon Roscoe ATA Solid Waste Work stream project sponsor

TPI wished to state 3 points.

1. TPI wished to understand what progress has been made by the ATA with

respect to the new councils Waste Management and Minimisation Plan(WMMP) and where the ATA were currently at.

2. TPI wished to understand what the consultative process is for WasteDisposal Services. (WDS) is an unincorporated joint venture betweenTPI and Manukau City Council that owns the landfill at Whitford.

3. TPI are concerned that the ATA are relying on 4 reports in compiling theAuckland Councils draft WMMP, and that these reports contain seriouserrors, which are misleading and provide misinformation to the teamcompiling the WMMP draft. These reports are:

ATAs Solid Waste High Level Options Assessment dated March 2010

Auckland Regional Councils Auckland Waste Stock take and StrategicAssessment dated October 2009

Working Draft of Auckland Council Waste Assessment dated February2010

Waitakere City Council officers report Waste Management in theAuckland Region dated September 2009

These reports were compiled by one or more of the following consultingfirms;

Price Waterhouse Coopers (PwC) Morrison Low Consultants (MLC) Sinclair Knight Merz Group (SKM) Waste Not Consulting Ltd (WNC) Eunomia Research & Consulting (ERC)

4. TPI were particularly concerned that the ATAs Solid Waste High LevelOptions Assessment compiled by PwC had incorrectly stated they hadconsulted with TPI in compiling the report. Although no specific referencewas made to any such claimed consultation, a review of the PwC report did

not substantiate the claim. On numerous ocassions the PwC report clearlyimplies or states the contrary;

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PricewaterhouseCoopers (PwC) has been engaged to undertake a high

level desktop review(page 1)

A series of next steps and recommendations have been identified and areset out in Section 6. In summary we recommend: Engaging with key wasteindustry players to collaboratively discuss and source information so that

options to achieve WMA targets can be developed(page 2)

Key industry players, including TPI, ESL and Living Earth Ltd, haverecently made submissions to the Auckland Governance LegislationCommittee. All three organisations have similar views on the key issuesraised in this report(page 8)

This exercise requires significant data in relation to the waste stream,much of which is not readily available at present. . However, at presentavailability of such data is limited. There is therefore a need to work withESL and TPI to collect this information. (Page 11)

We recommend the following actions; Engage with key waste industryplayers to explore their ability to jointly agree:(page 17)

Restrictions; In preparing this report and forming our opinion, we haverelied upon, and assumed the accuracy and completeness of, all of theinformation available to us from public sources and furnished to us by theeight existing councils(page 18)

Sources of information; In preparing this Report, we have had access tothe following: Submissions to the Auckl

appendix b - consultation

Documents