Winnipeg Should Scrap Recycling RFP

Commentary, Core Public Sector Reform, Lee Harding

The City of Winnipeg “austerity” budget predictably nickels and dimes ratepayers, with rate increases and service cuts in response to lower than expected provincial transfers. But, Council has fumbled the ball big time by throwing away tens of millions of dollars in available savings on garbage collections and recycling.

In September of 2016, independent pollsters found 93% of Winnipeggers satisfied with garbage collection and recycling. Both were provided by Emterra Environmental, which had the contract since 1995. Emterra had won the previous tender for curbside collection, having submitted the lowest bid. In 2016, and happy to continue that relationship, offering the city another two years of curbside collection at its then existing annual cost of $16 million.

However, the city had other plans.

It put out a request for proposal (RFP) instead of a tender; the lowest price would no longer be the determining factor. So, with its arbitrary criteria accounted for, the annual curbside collection contract was split between two companies: GFL at $9.7 million, Miller Waste at $14.9 million. The now $24.6 million combined annual cost means taxpayers will pay $17.2 million more over these next two years than they would have under Emterra’s offer.

The problems don’t end there. It is still unknown whether the provincial non-profit recycling company Multi Materials Stewardship Manitoba (MMSM) will pay the $5.2 million annual difference between GFL’s fees and those charged by Miller Waste.  MMSM is supposed to pay 85 percent of residential recycling costs. However, because the City has unilaterally increased cost by going with two contractors, they are balking at paying more for the exact same amount of work and no tangible benefit. Accordingly, Winnipeg taxpayers could be on the hook for another $36.4 million over the length of MMSM’s 7-year contract. If so, we, the taxpayers, would all pay a percentage point more on our property taxes for the same curbside service we had in 2016.

Unfortunately, taxpayers may face yet another unnecessarily high-priced sequel with recycling, as the city has abandoned seeking tenders with it as well. It has just issued another RFP for recycling services which, again, ignores practical realities.

In 2011, Winnipeg’s Integrated Waste Management Plan forecast that recycling volumes would rise from roughly 45,000 tonnes annually up to 85,000 by 2016 and 123,100 by 2031. Those projections are unrealistic, recycling volumes plateaued at 55,000 tonnes in 2013. Thank, thinner and fewer newspapers and changes in the packaging of foods products

Undaunted by reality and increasing costs, city bureaucrats now insist on a new recycling facility with a 65,000 tonne annual capacity and brand new equipment. This overkill, which duplicates Emterra’s perfectly fine recycling facility, could cost $40 million. But consider Emterra recently spent $23 million to expand and modernize its recycling facility: $8 million in 2012 to increase its capacity from 45,000 tonnes to 80,000 tonnes. As it stands, Emterra will have to shut down its recycling facility, since 90 per cent of its business (the Winnipeg market) will go to the new mega facility.

This latest emerging city bungle comes at a time when most municipalities are getting out of the recycling business. Vancouver and many other B.C. local governments handed over recycling collection to RecycleBC, saving money at replacement time for its fleet of trucks. In Ontario, the 2016 Waste Free Ontario Act requires producers, packaging manufacturers and newspapers to fund and operate residential recycling collection and processing. This encourages packaging and products being more easily recyclable. Required municipal involvement is on its way out.

Winnipeg’s recycling RFP should be scrapped. Trends argue for that. Right now, China is the world`s largest importer of recycled plastic and paper. China now has 51% of the world recyclable market including 70% of the American market and 55% of recovered paper and fiber. China has shocked the world by announcing plans to no longer allow imports of 24 kinds of scrap materials, including plastic and paper recyclables. This is the riskiest time for making expensive new municipal recycling investments. Leave major new investments to the private sector, which can weather market downturns better because of its long-term relationship with world commodity markets.

The lesson to be learned from the city’s garbage and recycling blunders is that its bureaucrats should recognize a good quote when they see it, and think twice before changing from a reliable, lower cost supplier (Emterra) and rolling the dice on a risky investment in an unneeded new recycling plant.   

City politicians should scrap this recycling RFP and, going forward, pursue ratepayer friendly options.