2016-02-02 P&O Committee - Item 7 - Attachment 1 - Waste Management PBA Draft Report

Impact Area      Impact Criteria   Impact     Benefits / Cost Description                                                        Qualitative Assessment
                                   Type
                                                                                                                    Likelihood       Consequence          Impact
                                                  the community under the CBU model (e.g.
                                                 reduced network of transfer stations, reduced recycling),
                                                  although Council still retains the ultimate decision-making
                                                  power regarding the setting of rates and charges under
                                                  both business models.
                 Compliance        Benefits      The application of full cost pricing will ensure that the       Very High         Moderate         High Benefit
                                                  business complies with the relevant aspects of competitive
                 MIXED IMPACT                     neutrality applicable to a significant business activity in a
                                                  competitive business environment.
                                   Costs         Council would face increased compliance relating to the         Very High         Low              Medium Cost
                                                  need to support the CBU, including service level
                                                  agreement negotiation and documentation, corporate plan
                                                  reporting requirements, taxation equivalent returns,
                                                  reporting the business separately within the annual budget
                                                  and consolidating the business annual performance plan
                                                  outcomes within Council’s annual report, etc.
Market           Market Pricing    Benefits      The adoption of commercial, full cost recovery pricing          Very High         Moderate         High Benefit
                                                  principles will ensure that product prices are targeted at a
                 NET                              minimum level that reflects the full economic cost of
                 BENEFIT                          service, whilst ensuring that competitive neutrality
                 (low)                            principles are complied with when considering pricing
                                                  strategies with respect to market share.
                                   Costs         Additional costs associated with the CBU model                  Very High         Low              Medium Cost
                                                  (compliance costs) would need to be recovered through
                                                  prices charged to customers.
                 Competitive       Benefits      Under both the CBU and FCP models, the business would           Very High         Moderate         High Benefit
                 Neutrality        Costs          be required to set prices under the competitive neutrality      n.a.              n.a.             Nil Cost
                                                  principle, therefore eliminating any potential advantages
                 NET                              associated with local government ownership and ensuring
                 BENEFIT                          that prices are set on the same basis as private operators.
                 (high)
Business Staff   Resourcing        Benefits      Nil identified                                                  n.a.              n.a.             Nil Benefit
                                   Costs         Additional costs would likely be incurred to allow the          Very High         Moderate         High Cost
                 NET COST                         business to maximise commercial opportunities as well as
                 (low)                            to ensure CBU compliance with additional statutory
                                                  reporting requirements.
                 Morale            Benefits      The management autonomy created by CBU reforms may              Moderate          Low              Low Benefit
                                                  potentially assign a certain degree of responsibility and a
                 MIXED IMPACT                     stronger performance culture to the business and therefore
                                                  its employees.
                                   Costs         The adoption of the CBU model would result in additional        Moderate          Low              Low Cost
                                                  compliance related responsibilities for the business

Waste Management Public Benefit Assessment                                                                                                                         Page 21