2016-03-07 General Committee - Item 2 - Waste Management PBA Final Report - ATTACHMENT 1

1. PBA Background
1.1      Need for this Public Benefit Assessment
Noosa Council (Council) is responsible for providing waste management services to residents and
businesses in the Noosa shire. Between March 2008 and December 2014 these services were
provided by the Sunshine Coast Regional Council following Council amalgamations that resulted in
the amalgamation of the Noosa, Maroochy and Caloundra Councils, and their corresponding waste
management activities.

Following the amalgamation Sunshine Coast Regional Council was required to undertake a public
benefit assessment of the new regional waste management business. The Public Benefit
Assessment (PBA) undertaken in 2010 recommended the implementation of full cost pricing
reforms to the business, which was subsequently adopted by the Sunshine Coast Regional
Council.

Waste management service provision was further impacted following the de-amalgamation of
Noosa from the Sunshine Coast Regional Council on 1 January 2014, whereby Noosa Council
resumed responsibility for waste management in the new Noosa shire. The state government de-
amalgamation legislation included provisions regarding Council businesses and the requirement to
undertake new public benefit assessments should they be considered financially significant. Whilst
Noosa Council questioned the cost benefit to the community of undertaking a further PBA given
the recent PBA undertaken by the Sunshine Coast Regional Council in 2010, the state government
advised it was still required.

As such Council is now required to undertake a PBA of its financially significant waste
management business activity to determine the most appropriate business structure under
National Competition Policy (NCP) reforms. The reform options under consideration include:

3. The business remains a Council service, and continues with Full Cost Pricing (FCP) reform
   (minimum level of reform); and
4. The business becomes a Commercialised Business Unit (CBU).

The objective of the PBA will be to assess whether the benefit to the Noosa community (in terms of
service quality and cost) of applying the competitive neutrality principle in relation to a significant
business activity outweighs the costs of applying the competitive neutrality principle. Under the
competitive neutrality principle, an entity that is conducting a business activity in competition with
the private sector should not enjoy a net advantage over competitors only because the entity is in
the public sector.


1.2      Business Models Under Assessment
It is important to note that both reform options involve setting prices on the same cost base as the
private sector, incorporating:
 Direct and indirect costs (e.g. wages, materials, consumables, superannuation);
 Administration and management costs;
 Return of capital/depreciation;
 Return on capital/assets (resources, infrastructure, land, buildings, plant/equipment);
 Incorporation of tax equivalents such as Council rates, land tax, payroll tax, FBT and taxes on
     business profits; and

Waste Management Public Benefit Assessment                                                      Page 7