International Review of Waste Management Policy - Department of ...

In these situations, it would be appropriate to have in place benchmarking
mechanisms for the costs of collection services so as to assess the costs and quality
of service of the different operators. We strongly recommend that the benchmarking
data are made a reporting requirement for local authorities. There is a dearth of
quality information on collection costs in Ireland, and this type of reporting
requirement would do much to fill the existing void.
3.6.2 How Will Costs be Recovered?
It is important to note that, as far as household waste is concerned, in most EU
Member States (and several other countries besides), households pay for the waste
management services through a combination of:
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• Central government taxation;
• Local government taxation; and
• A variable ‘user pays’ element.
In Ireland, the middle of these three tiers is absent.
The attraction of the three tiered approach is that with the exception of the user pays
element, the costs of the service are met by payments which householders are
required to make. Given that, in such countries, the variable element either does not
exist, or constitutes (on average) something of the order 30-50% of the cost of the
service, then there is relatively little incentive for households not to use the service. 92
The question arises as to how, with a tendering approach in place, the costs of the
service would be met by the users? If the costs were to be met through payments by
households, might it not be the case that the costs would still be deemed too high for
some customers to consider availing themselves of the service on offer?
This is an important problem to resolve. Ireland has no local taxes. We would suggest
that:
1. In the absence of such taxes, it would be preferable for a significant proportion
of the costs of service provision to be met through central government
taxation. Local authorities would be paid an amount based upon a formula
92 There is a fundamental misunderstanding of some of basic concepts of how waste services are
financed, and of operational issues, in the OECD’s discussion of cost recovery in the waste sector (see
OECD (2008) Ireland: Toward an Integrated Public Service, Paris: OECD, available at:
http://www.oecd.org/document/31/0,3343,en_2649_33735_40529119_1_1_1_1,00.html). The
OECD praises the Irish model for the extent of ‘cost recovery’, conveniently overlooking that costs are
recovered in all municipal waste collection systems, but rarely with high proportions of that cost being
recovered through variable charges. The OECD also fails to draw the link between the high level of ‘cost
recovery’ and the low level of service take-up. The two are (obviously) linked as the price of the service
at the point of delivery affects demand for it. Particularly in the Irish situation, and in advance of any
measure to require householders to make use of a service, the situation least likely to engender
service take up is the one the OECD seems to be promoting. Furthermore, under pay by use systems,
for reasons associated with revenue stability (the need to ensure the costs of the service are covered)
applying high variable rates is apt to cause problems in terms of early implementation of pay-by-use.
This problem is widely discussed in the literature regarding pay-by-use (see Appendix 8.0).
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