NSW IPART is expected to hand down its decision on the review of the domestic waste management charge (DWMC) in September. This will require councils to review their current DWM pricing methodology and understand the long-term impact on both the general rate and the DWMC. Morrison Low is currently working with NSW councils to fully understand the impact.
IPART has advised that there will be an 18-month transition period and a requirement for most councils to rebalance costs from the current DWM calculation back to general rates.
Note: please see the attached presentation for further information on incremental costs and rebalancing.
The IPART determination will have three key regulatory requirements:
- Clear pricing principle - councils will be required to demonstrate to IPART the annual DWMC meets the six pricing principles:
- Benchmarking - councils will be required to provide benchmarking data on 15 items. Some of these items will be:
- Benchmarking items 1-5 will be waste costs per service:
- tip voucher/hard waste
- total DWM
- Benchmarking (8) number of customers
- Benchmarking (9) number of multi-unit dwellings
- Benchmarking (10) service density (residences per km2)
- Benchmarking (12) average volume to landfill (kg per residence)
- Benchmarking (13) free form box (council specific data).
Whilst the gathering of the benchmarking data is relatively straightforward and should be easy for most councils to attain, we would recommend councils document the methodology and procedure for gathering the data, to ensure information is robust and repeatable year on year. We would also suggest that councils should consider using the benchmarking data to measure efficiency for the ‘efficient costs’ DWM pricing principle.
- Regulation by exception – a council that is deemed to be an outlier, e.g. has a DWMC that is, for example, >15% higher than a comparable council, may be audited by IPART.
Recommended next steps:
- Councils consider the impacts of the transferring of income and expenditure from DWM to General Rates and determine a reasonable costs attribution table that can be applied by all councils.
- Councils consider undertaking an analysis of DWM services with comparable councils, as a baseline measure in service performance.
- To increase transparency and accountability Council's waste strategies and environmental plans should be integrated with a Domestic Waste 10-year Long Term Financial Plan (DWLTFP).
- The DWLTFP to be based on a set of pricing principles, including a documented methodology for calculating corporate overheads and assumptions for wage growth, CPI etc, to develop a balanced DWMC for the 10-year LTFP.
For more information, please contact Mark Wood on firstname.lastname@example.org or 0419 203 651.