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

requirements are being met in accordance with legislative requirements, slightly higher prices may
be required under the CBU model to recoup additional compliance costs.

Regional Development and Economic Stability - An overall net benefit for regional development
and economic stability would be likely if the FCP model was retained, as it would minimise
administration and compliance costs in the provision of waste and recycling services, provided
funds generated by the adoption of full cost pricing practices continue to be invested into waste
infrastructure (and landfill rehabilitation) to ensure sustainable service provision.

Social Welfare and Equity - An overall net benefit for social welfare and equity would be likely if the
FCP model was retained, given that administration and compliance costs are minimised and
Council retains control over what is largely a community service targeted at social and
environmental outcomes, subject to intergenerational equity being promoted by ensuring
appropriate ongoing levels of investment in waste service provision is maintained.

Environment - An overall net benefit on the environment would be likely if the FCP model was
retained, as it will provide Council greater control and flexibility in managing the delivery of the
environmental benefits targeted in waste strategy initiatives.

PBA Recommendation on Preferred Business Structure
The PBA shows that when comparing the net benefit of the available reform options, the adoption
of the Full Cost Pricing (FCP) business model provides the greater net community benefit when
compared to the Commercialised Business Unit (CBU) business model.

It is therefore recommended that to comply with legislative requirements associated
with the PBA process Council retains the Full Cost Pricing (FCP) business model
for the Waste Management business activity.

The FCP business model is appropriate moving forward as:

   The FCP business model is currently adopted by Council for the business and can be easily
    retained without any issues;
   Council still has the flexibility to voluntarily apply additional commercial principles that it
    considers will provide benefit to Council, ratepayers and the broader community at little to no
    additional cost to customers.
   The business currently has, and will continue to have, considerable legislative obligations
    regarding the services it offers to the community, with the provision of waste and recycling
    activities considered an essential community service with social and environmental objectives
    rather than profit maximisation being the primary focus.
   There will be increasing control and intervention in waste service provision resulting from
    Federal and State policies and agendas, with these changes likely to require continued
    involvement by Council in strategic decision making.

Implementation Timetable
Given FCP reforms are currently applied to the business current processes and timings
surrounding the annual review of business expenditure thresholds should be continued.



Waste Management Public Benefit Assessment                                                      Page 5