On behalf of Family First I speak on the Waste Recycling and Processing Corporation (Authorised Transaction) Bill 2010 (No 2), the object of which is to authorise and facilitate the transfer to the private sector of the assets, rights and liabilities of the Waste Recycling and Processing Corporation. The Waste Recycling and Processing Corporation, known as WSN, which trades as WSN Environmental Solutions, operates a State-owned waste collection and processing business.
Part 2 of the bill authorises the transfer of WSN to the private sector. To provide flexibility, part 3 authorises the transfer of WSN to the private sector through various methods: the direct vesting of assets and liabilities, the conversion of WSN to a Corporations Act 2001 company and the subsequent transfer of its shares, or the establishment and transfer of a new company.
The bill provides the Treasurer with the relevant powers and methods. It includes a provision allowing the new owner to be excluded from the payment of State taxes relating to this transaction, such as, stamp duty. Section 52A of the Conveyancing Act 1919 will not apply to a contract for the sale of the land that is entered into for the purposes of this transaction.
Clause 19 makes it clear that provisions in the State Owned Corporations Act 1989 do not prevent, restrict or otherwise limit the carrying out of this transaction. This applies also to the Waste Recycling and Processing Corporation Act 2001. There are provisions to allow for the repeal of that Act after the successful completion of the transaction.
The bill establishes the Waste Assets Management Corporation, which will retain and manage sites not transferred to the new owner as part of this transaction. The Waste Assets Management Corporation will be under the direction and control of the Treasurer. A general manager will be appointed and staff may be employed under chapter lA of the Public Sector Employment and Management Act 2002. I congratulate the Opposition on negotiating with the Government the inclusion of the amendments, which we envisaged moving to this bill.
The bill authorises the transfer of employees to the private sector and the continuation of their existing leave and superannuation entitlements, as well as a three-year employment guarantee for permanent employees. Temporary employees will receive a three-year guarantee or to the end of their fixed term, whichever occurs first. This bill also empowers the Treasurer to provide transfer payments to employees who choose to move to the private sector. It also includes a provision to allow permanent and temporary WSN employees to remain with the public sector.
In late 2008 the New South Wales Government announced that it intended to investigate the possible sale of WSN. Financial, legal, tax, accounting and environmental advisers were appointed to undertake a review of WSN. Following the completion of this review, the Government announced its intention to proceed with the transaction and now is introducing this enabling legislation. According to the agreement in principle speech in the other place, the Government has decided to proceed with this transaction for a number of important reasons.
Firstly, the sale of WSN addresses the inherent conflict between the Government being both owner and regulator of this business. Previous speakers have pointed out the difficulties in this regard. Secondly, WSN operates in an increasingly competitive market along with private sector operators, who are best placed to make the significant technological development and capital investment necessary in a growing waste industry. Government members who spoke in this debate indicated how important this is to the future of our State.
There is growing demand for alternate waste technology facilities, which serve the critical function of diverting waste from landfill and providing recycling opportunities. The previous speaker, Greens member Ms Sylvia Hale, said that Penrith City Council and other councils have advised citizens how to store their waste for fortnightly collections. Rather than keeping waste food in a freezer for a fortnight, with all the problems that creates, such as, an increase in electricity consumption, I recommend keeping four chickens in the backyard. They will clear up all the waste created by a family and supply the family with fresh eggs at no cost. I also suggest there is nothing better than a worm farm because it improves the soil in the garden.
I join the Opposition and crossbench in highlighting key questions that need to be addressed, including the structure of the sale, the handling of closed sites, and whether money will be put aside for the remediation of closed sites and any liabilities that may occur as a result of closure. The longstanding market expectation is that the New South Wales Government will retain control of closed facilities, stripping out of WSN’s big liabilities to maximise the value of its other assets. This will lead to long-term and perhaps serious liabilities still to be paid by the taxpayer.
WSN is the largest waste management network in Australia, with 11 waste recycling, processing and disposal facilities across Sydney, and the sale is expected to be worth around $300 million. WSN has applied to extend the final date for acceptance of putrescible waste at its Eastern Creek landfill site from June 2014 to June 2016. However, the Eastern Creek facility is likely to be included in the grouping of dead assets that the Government will retain.
I join other members who have stated that we must ensure that liability is fully funded before the Government spends the sale proceeds on other projects. There must be more assurances about processes to ensure social and environmental outcomes will be achieved. I congratulate the Opposition on its negotiations with the Government in this regard.
WSN has a bevy of council waste collection contracts. Despite its competitors regularly referring it to the Australian Competition and Consumer Commission alleging that it uses its near monopoly on disposal to underbid on collection, market scuttlebutt suggests that several operators will be very keen to get their hands on this business. The network of transfer stations dotted around Sydney will also be a key attraction for any potential bidders.
According to Inside Waste Weekly, there is plenty of industry speculation about the form of the sale. Would selling the entire business create anti-competition concerns? It seems unlikely Veolia—which broke WSN’s disposal monopoly when it opened the Woodlawn facility near Goulburn—would be allowed to restore that monopoly in its own favour. But would a duopoly with two players in the municipal disposal market be enough for Sydney? The waste and environment levy is paid by councils for every tonne of rubbish that goes to landfill and is meant to fund community education and other waste reduction projects. Councils in Sydney, the Hunter region, the Central Coast and Illawarra, and in Wollondilly and Blue Mountains local government areas currently pay the levy, and councils in coastal areas from the Hunter to the Queensland border will be paying as well.
By 2012 approximately $150 million will be collected and supposedly funnelled into “new or expanded environmental programs”. But New South Wales has only budgeted to spend $10.5 million on these activities. The rest of the money will sweeten the deal for SITA Environmental Solutions, associated with the French giant Suez Environment Corporation, or Transpacific Industries, which are reportedly competing to buy Waste Services. Inside Waste Weekly stated that spending “$300 million would potentially offer its buyer an (almost) instant monopoly in the Sydney waste disposal market”. Members of the crossbench were concerned when they discussed that matter.
The Government can learn from residential waste collection in Finland. Finland is one of relatively few countries to have a system of competition in the market for residential waste collection. Sixty-one per cent of municipalities in Finland have adopted a system whereby each household is obligated to contract individually with a waste collection company for waste collection and disposal services. In addition, housing cooperatives can tender privately for waste collection services.
The role of the local authority is limited to a form of regulation—the local authority decides what type of waste are to be encompassed by the system, what maximum prices the largest companies can charge and in what regions companies are obliged to offer their services. I echo the concerns raised by other members regarding the economic, environmental and social costs of WSN.
In principle I support the bill but I want assurance from the Government that the sale of WSN will not be to the detriment of the State’s citizens.