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

   Adjustments for other advantages and disadvantages of public sector ownership.

Under both business models, non-commercial activities undertaken by the business at the direction
of Council (e.g. free waste disposal for community groups) may also need to be funded through
community service obligation payments, if the business is unable to levy a commercial charge for
such services across the community.

The primary differences between the business models under assessment are outlined in the table
on the following page. These are further expanded in Appendix A.

Table 1.1: Differences between the Available Business Models under Assessment

Reform Option          Implications
Full Cost Pricing       Business is essentially operated as just another branch within
                          Council’s organisational structure.
                        Prices are set in accordance with commercial cost recovery.

Council                   A commercialised business unit (not a separate legal entity) is
Commercialised             created by Council to manage the business, with a dedicated
Business Unit              business unit manager employed.
                          The business unit enjoys increased managerial autonomy for day-
                           to-day operations and strategic decisions.
                          The business may have a greater ability to source inputs from
                           outside of Council, subject to the framework adopted.
                          The business operates under its own business plan.
                          The business has more of a commercial orientation than under the
                           full cost pricing reform option, and is subject to separate more
                           detailed performance reporting (financial and non-financial).
                          Prices are set in accordance with commercial cost recovery.


Adoption of either of the above business models is intended to make the true costs and
performance levels of Council business activities more transparent and accountable, thereby
facilitating better decisions by Elected Members, Chief Executive Officers and Managers within
Queensland Councils. NCP makes no presumption that public sector business activities are
inefficient. Instead, the aim of the reforms is to encourage productivity improvement and best
practice in the operations of the Council businesses, as well as providing for a level playing field
between the public and private sectors in service provision.

It is also important to note that the two reform options under consideration do not include
privatisation or the ‘selling off’ of the business. In both instances, Council will retain ownership of
the waste management business. The primary differences between the two options pertain to the
level of responsibility ascribed to Council (under FCP) versus the business manager (under CBU)
potentially responsible for the operation of the business.




Waste Management Public Benefit Assessment                                                      Page 7