Appendix B

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APPENDIX B - CONSULTATION 1. 2. 3. Submissions to the Auckland Governance Legislation Select Committee Correspondence and initial meeting minutes between the council/ ATA and Transpacific Industries Copies of minutes of preliminary consultation meetings with waste industry key stakeholders pg 4 pg 78

pg 100

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SUBMISSIONS TO THE AUCKLAND GOVERNANCE LEGISLATION SELECT COMMITTEE

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EnviroWaste
9 February 2010 Submission to:
!

arhg =sV =ol

L...~slation Comnfittee j
Aucklano Governance /

The Auckland Governance Legislation Committee on the: Local Government (Auckland Law Reform) Bill This submission is made in the name of: EnviroWaste Services Ltd (ESL), 354 Neilson Street, Onehunga, Auckland ESL wishes to appear before the committee to speak to its submission. In particular ESL wishes to comment on Clause 11 Part 1 of the Bill which addresses the functions and duties of the Transition Agency, including with regard to governance of solid waste by Auckland Council. In summary, ESL's position is:
a.

The Bill should be amended to enable an industry discussion on the possible formation of a Public Private Partnership (PPP) between Auckland Council and private landfill owners to control the region's solid waste disposal functions. This would deriver: cost efficiencies to ratepayers; solid waste minimisation and greater resource recovery for A uckland Council;

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regulated solid waste disposal pricing;

b.

The Bill should be amended to provide for the potential consolidation of the solid waste functions and assets of Auckland Council into a Council Controlled Organisation.

1. Executive Summary
a,

With the establishment of Auckland Council there is an opportunity to reconfigure the control and governance of solid waste infrastructure in Auckland. However, enabling legislation is required to provide: Commerce Act exemption so the ATA can enter discussions with industry participants; and The formation of a Solid Waste CCO so it may enter into a PPP with the owners of the landfills that serve Auckland TPI/MCC, TPI and ESL.

b.

In ESL's submission, the management of regional solid waste issues should not be dealt with in a piecemeal way. A separate, dedicated CCO should be set up to plan and manage regional solid waste matters, including existing JVs, contracts and other arrangements for waste.

C.

The amendment to the Local Government (Auckland Law Reform) Bill to enable the creation of a PPP does not commit the ATA or Auckland Council to such a course. It does however provide the new council with the necessary legal instrument to get on with it. Such an opportunity to create the appropriate legislative settings is unlikely to present itself again.

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2. Envirowaste Services Ltd (ESL) a. Envirowaste Services Ltd (ESL) is the second largest operator in the New Zealand waste services market.
b.

ESL offers services to councils, the public and industry through collection services, landfills and transfer stations throughout the country.

C.

ESL owns and operates the largest landfill to serve the Auckland market at Hampton Downs with more than 30 million cubic metres of airspace available. Hampton Downs is a world class landfill engineered to the highest standards of global best practice, including capture of leachate and recovery of gas from which electricity is generated to power 1,500 households. Over 500,000 tonnes of refuse is handled annually by ESL's collection, waste processing and waste disposal facilities throughout the Auckland region.

d. ESL was established in Auckland in 1991 as Northern Disposal

Systems Limited (NDSL), a 100% owned subsidiary of Infrastructure Auckland, a public body owned by the Councils of the greater Auckland area. It later joint ventured with the Waste Services Division of Fulton Hogan Limited in the South Island.
e.

In April 2007 EnviroWaste was purchased by funds, managed or advised by Ironbridge Capital. These funds are leading providers of private equity to growth businesses in New Zealand and Australia. ESL has accordingly been owned by various public and private ownership structures and has also been a partner itself in successful PPPs elsewhere in New Zealand notably Transwaste Canterbury Ltd in Christchurch.

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3. Transwaste Canterbury Ltd

a.

ESL was a founding partner of Canterbury Waste Services Ltd, which formed a PPP between local government and New Zealand's principal landfilling companies to establish and manage waste disposal facilities for the Canterbury Region as Transwaste Canterbury Ltd.

b,

The model is regarded as an exemplar for governance of solid waste assets designed to drive solid waste minimisation. The model satisfies the objectives of many parties in the following ways: For the community: > > > Competition retained for kerbside collection of three bin solid waste streams. Solid waste minimisation targets achieved. Leading resource recovery and recycling initiatives made possible.

For local government: > > > Delivery on solid waste minimisation plans. Control of solid waste disposal pricing. Facilitating resource recovery and recycling initiatives.

For industry partners: > > Regulated solid waste disposal pricing. Operational control of facilities.

C.

A detailed summary of Transwaste Canterbury Ltd's formation and operations is included at Appendix One.

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4. Auckland solid waste infrastructure a. The current configuration of solid waste infrastructure in the Auckland region is as follows: Three large landfills provide the region's solid waste disposal facilities: Whitford owned by a joint venture 50% Transpacific Industries (TPI), 50% Manukau City Council. Hampton Downs owned by ESL Redvale owned by TPI. Eleven major transfer stations owned by ESL, TPI, other private companies, local authorities and joint ventures between various of these parties.
b.

In addition, Council kerbside collection contracts are awarded on a contestable basis to private collection companies, some of which own landfills and transfer stations and others that have contractual relationships with landfill and transfer station owners. Disposal of solid waste collected as a result of these contracts tends to be awarded by Council directly to the landfill company. This solid waste can be delivered directly to the landfill by the collection vehicle or via a transfer station where solid waste is consolidated. A map of Auckland detailing the location of transfer stations, landfills and solid waste flows are included in Appendix Two.

c. The effect of this structure, developed over many years to serve seven separate local authorities each with a different Waste

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Minimisation and Management Plan, has been to produce several perverse outcomes including: Major transport inefficiencies have come about through the lack of coordination between kerbside collection contractors, transfer stations services with their different ownership structures and the privately owned landfills. By Auckland Council not owning or controlling sufficient of the relevant solid waste infrastructure, thus denying Council control over the solid waste streams and accordingly the ability to divert solid waste away from landfilling which is a precondition to meeting the WMA targets, solid waste minimisation in Auckland region is frustrated. Various independent reports have highlighted this issue, including the 2009 Royal Commission on Auckland Governance report, which noted that there would be considerable scope for improving Auckland's solid waste minimisation performance through the coordination and integration of the region's solid waste management functions. Without solid waste diversion, consumption of available landfill air space will continue unabated. This may well expedite the need for a replacement Auckland landfill with the associated consenting issues and construction costs and amenity concerns.

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5. The Waste Minimisation Act 2008 a. ESL acknowledges that: The objective of the WMA and the associated NZ Waste Strategy and Targets, is to reduce the volume of waste to landfill and promote sustainable resource use and resource recovery. Under the WMA Auckland Council is required to produce a Waste Minimisation Plan (WMMP) with clear targets for reducing volumes of waste to landfill.
b.

As a responsible NZ company, ESL supports the objectives of the WMA and is in the process of investigating and introducing a number of recycling and resource recovery initiatives.

6. Auckland Waste Stocktake & Strategic Assessment 2009

a

As the Auckland Regional Council's Technical Report No.107 (October 2009) Auckland Waste Stocktake & Strategic Assessment 2009 recognised, the current model is not ideal for the Auckland region as the private sector has a different set of imperatives to the public sector. There are certain public goods that are not provided for under the current model: Increasing solid waste diversion: private sector landfill operators have a natural driver to secure as much solid waste tonnage as possible to fill up landfills and repay investment;

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Resource recovery: At present there is insufficient commercial incentive for privatelyowned facilities to invest in maximising resource recovery from solid waste streams; Collection and transfer efficiencies: solid waste is not hauled in the most efficient way in Auckland as private operators are currently incentivised to use their own landfills and transfer stations. This results in additional traffic congestion and greenhouse emissions as well as leading to increased collection costs.

7. Commerce Act Considerations

a.

A Commerce Act exception is necessary to enable a proper exploration, and to facilitate the implementation, of an operating model to deliver optimum waste minimisation: Although it is possible for competitors to discuss arrangements of this nature, the restrictions on sharing confidential information that are necessary to protect competition going forward restrict the free flow of dialogue about specific cost and revenue components of a business at the granular level that would be necessary to establish whether it is possible for a PPP to be established and if so, what its optimal form might be. The ultimate establishment of a joint venture or other PPP structure is likely to be caught by Parts 2 or 3 of the Commerce Act if both private companies are involved.

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Although an authorisation process can take into account wider public benefits and efficiencies, the processes are cumbersome. In addition, the Commerce Commission, as an economic regulator, does not have the same ability as Parliament to weigh nonprice benefits such as environmental benefits, which are primarily policy driven. Such an exemption is not unprecedented. For example s 91 of the Civil Aviation Act 1990 contains a similar exemption to the exemption sought here.

8. Formation of Waste Services Agency

a.

ESL seeks that the Bill be amended to expressly establish a CCO of the Auckland Council in relation to solid waste functions. The objective of this CCO would be to undertake its functions in a way that contributes to affordable, integrated, and sustainable solid waste services in Auckland.

b.

This new CCO, in addition to having the full capacity to carry on or undertake any activity or any business to achieve its objectives and functions, would be expressly enabled to enter into such arrangements as JVs or PPPs with private landfill owners in relation to the region's waste disposal functions.

C,

The Bill clearly envisages that Auckland will achieve longterm integrated solid waste management and minimisation planning and services. This is made clear by clause 11, which proposes to amend section 13(1) of the Tamaki Makaurau Act by inserting a new subsection (cb)(ii) requiring the ATA to oversee the preparation by existing local authorities of detailed proposals for

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achieving longterm integrated waste management planning, including proposals for managing waste contracts, leases and other arrangements.
d.

ESL considers the Bill should go further, and provide clear direction to the ATA or the Auckland Council to establish a CCO in relation to solid waste management in Auckland. CCOs provide a mechanism by which the benefits generally associated with private corporatisation, most importantly transparent cost identification, can be obtained while maintaining public ownership and oversight in relation to the services provided.

The Bill already authorises the ATA to constitute CCOs (see clause 24, new section 35G). The Bill also expressly provides for specific CCOs to be established, including a new CCO on transport, to be called "Auckland Transport" (new section 38 of the Auckland Council Act proposed by clause 35 of the Bill), and the "Waterfront Development Agency (new section 19B of the Tamaki Makaurau Act proposed by clause 18 of the Bill).

g In ESL's submission, the Bill should also expressly provide for the establishment of a CCO on solid waste. This could be accomplished in the Bill through a similar provision to that requiring the establishment of the Waterfront Development Agency.

9. Observations a. ESL's observations in respect of this Bill are that:

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If the Auckland Council is to meet the requirements of the WMA to complete its WMMP by 2012, progress will need to be made over the current transition period. The Local Government (Auckland Law Reform) Bill calls on the ATA to work with the existing councils of the Auckland region over the coming months so that a review of waste plans and options for a new WMMP can be provided to the incoming Auckland Council for consideration and approval within 6 months of its establishment. ESL understands that the ATA is taking expert advice on design options for solid waste infrastructure for the new council to ensure Auckland's performance under the WMA. Under the provisions of the Bill ATA can also have discussions with the industry on the viability of different options for the ownership and governance of solid waste assets in the region. It is anticipated that the outcome of these investigations by the ATA will be to recommend greater public control of the region's solid waste disposal facilities as a means of: accelerating Auckland Council's performance under the WMA; and enabling cost efficiencies in the haulage of solid waste across the region's transport network, leading to innovations to reduce traffic congestion such as night transport for solid waste haulage and access to the nearest transfer facility. If the new Auckland Council is to consider the establishment of a different working model for solid waste in the region it

11

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will need to engage with private industry which may give rise to Commerce Act 1986 issues described above.

10. Legislative recommendations a. For the above reasons ESL seeks a new section to be inserted by clause 19C of the Bill as follows:
19C Establishment of Auckland waste services agency

(1)

a councilcontrolled organisation for Auckland Council, to be known as the Waste The Transition Agency must establish Services Agency, with responsibility for coordinating, providing and/or procuring the provision of solid waste services in Auckland.

(2)

For the purpose of performing its functions, the Waste Services Agency (or any entity acting under the control or direction of the Waste Services Agency) may enter, carry on or undertake any activity or business, do any act, or enter into any transaction or arrangement. For the avoidance of doubt, this includes joint ventures, partnerships or any other arrangements with private

entities.
(3) Nothing in Part 2 or Part 3 of the Commerce Act 1986 shall apply to or in respect of (a) the negotiation or conclusion of any contract, arrangement, or understanding between the Waste Services Agency (or any entity acting under the control or direction of the Waste Services Agency) and one or more private entities pursuant to (2) above, and any conduct giving effect to such contract, arrangement or understanding; or

(b) The negotiation or conclusion of any contract, arrangement, or understanding so far as it contains a provision relating to the forrnation of any business activity for the purposes described in (2).

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(4)

Section 35G applies to the establishment of the organisation as if the organisation were an organisation recommended to be established under that section.

bo

If the suggested clause 19C above is not to be enacted then, as an alternative, the following alternate clause 19C, should be enacted:
19C Application of Commerce Act 1986

(1)

Nothing in Part 2 or Part 3 of the Commerce Act 1986 shall apply to or in respect of (a) the negotiation or conclusion of any contract, arrangement, or understanding between the Auckland Council or council controlled organisation (or any entity acting under the control or direction of the Auckland Council or council controlled organisation) and one or more private entities for the purpose of coordinating, providing and/or procuring the provision of solid waste services in Auckland. For the avoidance of doubt, this includes joint ventures, partnerships or any other arrangements with private entities; or (b) The negotiation or conclusion of any contract, arrangement, or understanding so far as it contains a provision relating to the formation of any business activity for the purposes described in (1)(a).

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APPENDIX ONE CASE STUDY ON CANTERBURY WASTE SERVICES

Transwaste Canterbury Limited ("Transwaste") is a good example of a successful publicprivate joint venture in the solid waste industry. Formed in 1998 as a Local Authority Trading Enterprise under the Local Government Act 1974, Transwaste is now a CCO under the Local Government Act 2002. Transwaste is 50% owned by five Canterbury local authorities (Ashburton, Hurunui, Selwyn, and Waimakariri District Councils, and Christchurch City Council).1 The remaining 50% is owned by Canterbury Waste Services Limited (a subsidiary of Transpacific Industries Group (NZ) Limited).

Transwaste was formed because Canterbury local authorities recognised the need to adopt a strategic approach to waste management, including meeting modern environmental standards. The annual combined total waste produced by the districts of the six original participating councils was about 277,000 tonnes in 1997 ie only enough waste to justify one new landfill site equipped to meet the necessary standards. A number of private companies already owned potential landfill sites in Canterbury, and the councils did not want to compete directly with these companies. In entering into a partnering arrangement with the private sector, the councils involved could benefit from the private sector's greater technical knowledge of the requirements of modern landfills, without having to relinquish ownership of the landfill site or influence over the way it operated. This was particularly important because a comprehensive regional waste strategy had been prepared by the Canterbury Waste Joint Standing Committee, to which all the councils belonged. The
1 Ten Canterbury councils were involved in establishing the project, though only six decided to participate. The other Councils have reserved the option to join later.

14

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strategy integrated residual waste disposal by landfill with waste minimisation measures. The councils therefore considered there was a strong public sector interest in remaining involved to ensure that they could influence what happened throughout the whole of the waste chain.

The councils recognised early on that the site would have to be located in one of their districts, and the council of that district would inevitably face local opposition. A joint venture company could operate at arm's length from the councils involved, including the relevant council, and be able to choose the best site from an environmental perspective, removing potential for political influence to override inherent site suitability. The private sector companies also understood that waste volumes were sufficient for only one economic facility, and saw the advantage in a joint approach. The role of Transwaste was to select the landfill site, obtain consents, build, own, and operate the landfill. Canterbury Waste Services Limited was contracted by Transwaste to obtain all necessary consents, and to design, build, and manage the new landfill for Transwaste. The Councils funded half of the initial capital outlay of $16 million; the remainder was funded by Canterbury Waste Services Limited. A further $20 million capital required for the consenting process and establishment of the landfill was funded by debt. Ongoing operational costs are met from income received. The resulting landfill (at Kate Valley, Hurunui District) has a predicted life of 35 years. The councils that are party to the joint venture and Canterbury Waste Services Limited have undertaken to send all their waste to the Canterbury regional landfilL Independent checks and audits,

15

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including the appointment of independent legal and financial probity and financial auditors, have been instituted, to ensure that the landfill company acts as though it were in a competitive market.

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APPENDIX TWO A MAP OF AUCKLAND DETAILING THE LOCATION OF TRANSFER STATIONS, LANDFILLS AND WASTE FLOWS

17

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Notes: Key source of ]nefficiencies is site ownership, with longer dlsisnces travelled to maximise profits Some mutes result in closer RTS being passed enroute 1o olher RTSs or landfill further e field Dlrect transport from kerbside to landflll may result In lost opportunlties for consolidation and diversion Curen| routes create significant haulage across Harbour Bridge

....

Facilities
R.R.eTt.nsferswan(RTs}

Ownership I Control
O o R=US~ a.usmon 'I'I Rauune
ESL T PI MCC Mekowasts NSCC ACC WCC

Waste Routes so Diready to LarxNiU To Tramfer Sistkxt T~nsfer Slatkxt to LarxNi0 18

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TO: AUCKLAND GOVERNANCE LEGISLATION SELECT COMMITTEE

ON: LOCAL GOVERNMENT (AUCKLAND LAW REFORM) BILL
12 FEBRUARY 2010

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INTRODUCTION

This submission is from Transpacific Industries Group (NZ) Limited (TPI).

Transpacific wishes to be given the opportunity to present our submission in person to the Auckland Governance Legislation Committee. Our contacts are: Tom Nickels Managing Director Transpacific Industries Group (NZ) Ltd Private Bag 14919 Panmure Auckland 1741 Tnickels@transpac.co.nz (09) 574 0880 Marion Franks Legal Counsel Transpacific Industries Pty Ltd Private Bag 14919 Panmure Auckland 1741 mfranks@transpac.co.nz (09) 574 3615

ABOUT TRANSPACIFIC

TPI is part of Transpacific Industries Group Limited, a major publicly listed company on the ASX, that provides integrated industrial cleaning and total waste management to customers across Australia and New Zealand. TPI has a particular focus on the solid, liquid and hazardous wastes markets and is a leading provider of comprehensive recycling, waste and environmental services in New Zealand. Further details about TPIs New Zealand activities, and in particular in the Auckland Region and with the Councils in the Region, are provided in the Schedule at the end of this Submission.

EXECUTIVE SUMMARY

In general, Transpacific supports the Local Government (Auckland Law Reform) Bill (Bill) but there are several issues regarding the governance of solid waste by the Auckland Council on which it wishes to make submissions.

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In summary, these are: TPI submits that there is a strong case for the enabling legislation to require the Auckland Transition Agency (ATA) and Auckland Council to explore, in conjunction with waste industry participants, the merits of establishing a CCO for the management of Waste. This would create a framework for Council to enter into Public Private Partnerships (PPPs) in the region (e.g. the Transwaste Canterbury model). This may assist with improving transport efficiencies in the waste sector and also assist Council with achieving its long term waste minimisation objectives. TPI submits that the delivery of waste services to both the public and private sector should remain in private ownership to ensure ongoing market competitiveness and efficiency e.g. the current tendering processes enable local authorities in Auckland to get best value waste management services to achieve effective and efficient waste management and minimisation. The TPI/Manukau City Council (MCC) joint venture Waste Disposal Services (WDS) is currently proposed to be positioned under the CCO for Property Holdings & Development. TPI submits that this is not the appropriate CCO as while TPI and MCC each equally own the airspace in the Whitford landfill, the land is owned by MCC. Further, the land at the East Tamaki Refuse Transfer Station is owned by TPI and leased to the JV. In the absence of a CCO for Solid Waste, then TPI submits that the Councils interests in WDS should be placed into the CCO for Council investments. TPI submits that Clause 11(2)(cb), which expands the role of the Auckland Transition Agency (ATA) to oversee the preparation of options for Auckland Councils consideration with regard to waste management and minimisation, should include a requirement for the Auckland Council to engage and consult with waste service providers and waste generators to ensure that the best possible long term integrated and waste management solutions for the region is achieved. Clause 93 which relates to the timing of Auckland Councils review of bylaws about waste. TPI submits that there needs to be transitional provisions in the Bill to enable an appropriate lead in time for the waste management industry to respond and adjust their practices, so as to ensure compliance with the new bylaws. Clause 62 which imposes a moratorium on Auckland Council and its council-controlled organisations (CCOs) selling, transferring or otherwise disposing of shareholdings in any company, and certain types of land or buildings until 1 July 2012. TPI submits that this

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moratorium should only apply in circumstances where the CCO is wholly owned by the Auckland Council e.g. would exclude WDS.

CCO Solid Waste

TPI, as the owner of landfills, transfer stations, hazardous waste treatment and recycling facilities in the region, submits that there is a unique opportunity through this enabling legislation for the ATA and Auckland Council to explore, in conjunction with waste industry participants, the merits of establishing a CCO for managing Waste. The establishment of a CCO for Waste could potentially provide a key platform for the ATA and Auckland Council to carry out its task of overseeing the work of existing local authorities and the preparation of detailed proposals for achieving long term integrated waste management and minimising planning services as required under clause 11(2) of the proposed legislation. Further, this CCO would have the potential to review the overall infrastructure in the region for solid waste and consider private public partnerships (PPPs) and private sector participation as a part of its overall future strategy. TPI submits that it will be essential for any consideration of a CCO for waste to be done in conjunction with waste industry participants operating in the Auckland region. Potential community benefits include: achieving waste minimisation targets making more efficient use of the waste infrastructure in the region (roads, landfills, transfer stations, recycling facilities and hazardous waste management) improved overall governance in the waste sector

The Transwaste Canterbury Limited (TCL) model (JV between TPI and five Canterbury councils) is a good example of Councils and the private sector working together in the solid waste sector. TCL was formed in response to a comprehensive regional wide waste strategy and through its partnering arrangement with the private sector ensured that the waste industrys best practice and technical knowhow was incorporated into their regions long term solution.

Waste Collection Services

TPI submits that the private sector is best placed to deliver waste collection services to the greater Auckland

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community for the following reasons: The private sector has access to international best practice and technologies, ensuring that ratepayers in the region have the most cost efficient service Competition for Council kerbside collection services and private sector commercial & industrial services is strong and creates an efficient market benefiting the entire community through competitive market pricing. A Council run monopoly would likely push up prices and costs and ultimately increase costs for ratepayers in the region.

TPI/MCC JV

Waste Disposal Services (WDS) is an existing unincorporated joint venture between Transpacific Industries (NZ) Limited and Manukau City Council, formed in 1993. WDS is responsible for the ongoing development and operation of the Whitford Landfill in Manukau City. It is a council-controlled trading organisation as defined in section 6 of the Local Government Act 2002. The Bill proposes that the Auckland Councils interests in WDS will rest with CCO for Property Holdings and Development. It should be noted that land on which the Whitford landfill operates is owned by the MCC and the JV partners equally own the landfill airspace. Further, the land that the East Tamaki Refuse Transfer Station is situated on is owned by TPI and WDS has a right to lease the site. WDS does not own any land. TPI submits that, in the absence of a CCO for Waste, it would be more appropriate for the Auckland Councils interests in WDS to be placed into the CCO for Council Investments.

Transition Agencys role regarding waste management and minimisation

Clause 11(2)(cb) of the Bill proposes to amend section 13 of the Local Government (Tamaki Makaurau Reorganisation) Act 2009 by inserting additional functions and duties of the Transition Agency. These additional functions and duties relate to waste management and minimisation planning and services. In particular, the Transition Agency is required to: Oversee the work, if any, of existing local authorities in the preparation for the first waste assessment that the Auckland Council will make under section 50(2) of the Waste Minimisation Act 2008;

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Oversee the preparation of detailed proposals for achieving long-term integrated waste management and minimisation planning and services in Auckland (including proposals for managing waste contracts, leases, and other arrangements in relation to waste; and Prepare options on these matters for consideration by the Auckland Council.

TPI submits that in fulfilling its new duties under clause 11(2)(cb)(ii), the Transition Agency should be required to engage and consult with: commercial providers of waste management services; and waste generators. (This could be done, for instance, through consultation with organisations such as the Employers and Manufacturers Association and the Packaging Council.)

The Transition Agencys role of overseeing preparation of proposals for integrated waste management and minimisation planning and services in Auckland, and developing options on these matters, provides an opportunity for key industry stakeholders to assist in the development of a range of options for the Auckland Councils consideration. In TPIs experience, a number of local authorities, have not engaged or consulted with the waste industry when developing strategies for the management of waste in their districts or when preparing Waste Management and Minimisation Plans. Consequently, they are often not aware of the range of waste minimisation activities and initiatives initiated by the private sector or the extent to which these initiatives already promote effective and efficient waste management and minimisation. An example of this is the recent Waiheke Island kerbside collection and refuse transfer station contract, where services have been enhanced resulting in the range and volume of materials diverted from landfill having increased and the collection systems have been enhanced to accommodate community needs. If the Transition Agency were to consult with commercial providers of waste management services and producers to assist it with the preparation of options for the Auckland Councils consideration, this would inevitably assist with the aim of achieving long-term integrated waste management and minimisation planning and services in the Auckland Region. Looking beyond 1 November 2010, this would also assist Auckland Council in fulfilling its statutory responsibility

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under section 42 of the Waste Minimisation Act 2008, to promote effective and efficient waste management and minimisation within Auckland.

Bylaws about waste

Under clause 93(4) of the Bill, the Auckland Council is required to review each bylaw about waste and confirm, amend or revoke it before the earlier of, the date by which the Council is required to review the bylaw under section 158 or 159 of the Local Government Act 2002, or the close of 30 June 2012. TPI supports the inclusion of a statutory deadline for the review of waste bylaws. It is noted that the date of 30 June 2012 aligns with the requirement for the Auckland Council to review its Waste Management and Minimisation Plan by 1 July 2012, which seems sensible. It would be appropriate for there to be some transitional provisions in the reviewed Auckland Council waste bylaws to enable a reasonable lead-in time for the waste management industry to respond and adjust their practices, so as to ensure compliance with the new bylaws. Transpacific will consider seeking such provisions as part of the bylaw review process in due course.

Moratorium on sale of Auckland Council and councilcontrolled organisation property

10

Clause 62 of the Bill proposes to restrict the Auckland Council or any council-controlled organisation (CCO) of Auckland Council from selling, transferring, or otherwise disposing of shareholdings in any company, land or buildings currently used or designated for service delivery purposes or any other land or buildings with a current rating valuation of $250,000. This moratorium is set to apply until 1 July 2012. While clause 62(2) of the Bill sets out some exceptions to this moratorium, TPI is concerned about the potentially broad application of this restriction. The moratorium applies to any CCO of Auckland Council i.e. a new CCO as of 1 November 2010, but is not limited to wholly owned CCOs. The restrictions in clause 62 apply until 1 July 2012 which is effectively a year and a half after the Auckland Council is established. Current proposals for Auckland Council CCOs that have been developed by the Auckland Transition Agency, include WDS as part of a new CCO named Property Holdings and Development. While further consultation on the proposed CCO structure is yet to occur, in the event that WDS is included within a new Auckland Council CCO, TPI is concerned that clause 62 may unreasonably restrict WDS ability, as a public-private partnership, to dispose or sell property.

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For example, there may be situations where there have been lengthy negotiations undertaken by a current CCO to dispose of property, but the disposal has not occurred prior to 1 November 2010, and the statutory exemptions to the moratorium do not apply. In these circumstances, the moratorium could effectively result in the transaction not going ahead at all. The restriction would also encompass initiatives designed solely for restructuring purposes or to exchange land to enable more efficient development and utilisation of the landfill It is submitted that if there is to be a moratorium on the sale of property up to 1 July 2012, it should only apply where the CCO is wholly owned by the Auckland Council.

Schedule Details of TPIs activities in NZ and the Auckland Region

11

TPI has a wide network of operations include collection operations, municipal contracts, transfer stations, landfill operations, waste-to-energy sites, composting facilities, recycling plants and liquid and hazardous waste treatment. In New Zealand, TPI has over 2000 (contracted and employed) staff throughout New Zealand and has made significant capital investments in the New Zealand waste industry infrastructure. TPI has interests in numerous transfer stations, green waste and bio-solids processing facilities, recycling plants and landfills across the country. TPI through its solid waste division, Waste Management, has considerable experience in waste collection, waste treatment, organic and inorganic recycling, waste disposal, bio-waste management, landfill gas to energy technology, construction and operation of waste facilities and contaminated site remediation. TPI through Transpacific AllBrite Ltd provides a range of resource recovery and recycling services for a wide range of materials that may otherwise be disposed of in landfills. TPI through Transpacific Technical Services (N.Z.) Ltd also has significant investment in liquid and hazardous waste collection and processing including medical waste. TPI through its Transpacific Industrial Solutions operating division provides a wide range of industrial services including high pressure water blasting, road sweeping, CCTV drainage services and maintenance, local council sewer & stormwater maintenance, industrial plant shutdowns and facility management services.

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TPI through its subsidiary ERS New Zealand Ltd provides a range of integrated collection/recycling services for parts washers, oil filters and other hazardous waste from industrial workplaces, and for the collection and treatment of waste cooking oils and fats, and for the collection and recycling of waste hydrocarbon oils including ships sludges.

A significant portion of TPIs operating divisions and investments are located in the greater Auckland region. TPI, across its various business units provides services, or is a significant operator in all of the Councils affected by the move to a new amalgamated Auckland City under the legislation currently being proposed. Particular points of TPIs interaction with the local councils are: Waste Disposal Services (WDS) an unincorporated JV between TPI & Manukau City Council (MCC). This JV is a 50/50 partnership in the Whitford Landfill and East Tamaki Refuse Transfer Station. 10 year collection and Refuse Transfer Station (BOOT) contract for Waiheke Island with Auckland City Council (ACC). Disposal agreement with ACC for solid waste disposal at TPIs Redvale Landfill in the Rodney District. Disposal agreement with Waitakere City Council (WCC) for solid waste disposal at TPIs Redvale Landfill in the Rodney District. There is a related agreement between TPI and WCC which provides for tolling of TPI waste through WCCs transfer station. Disposal agreement with the North Shore City Council (NSCC) for solid waste disposal at TPIs Redvale Landfill in the Rodney District. Transport & Disposal agreements with various entities for bio-solid disposal at the Redvale Landfill. Kerbside refuse collection and disposal contract with Papakura District Council (PDC). Kerbside recycling collection, sorting and processing contract with Franklin District Council (FDC). Arrangements with the Auckland Regional Council (ARC) for the disposal of material collected by Hazmobiles operated by the ARC throughout the region.

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Stormwater maintenance contract with the FDC. Stormwater maintenance contract with the PDC Contract for the provision of CCTV asset inspections and reports for the MCC. Contract for the provision of CCTV inspections and reports for Metro Water Limited.

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Submission on behalf of Oi New Zealand to the Auckland Governance Legislation Committee

Dated:

12 February 2010

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SUBMISSION ON BEHALF OF O1NEW ZEALAND TO THE AUCKLAND GOVERNANCE LEGISLATION COMMITTEE

To:

The Auckland Governance Legislation Committee

O1 New Zealand

Submitter:

EXECUTIVE SUMMARY
O1 New Zealand (01 NZ) is New Zealand's leading supplier of glass packaging and is the only glass recycling operation in the country. OI NZ is a major supplier to the New Zealand food and beverage industries and has been instrumental to the international success of these industries for upward of 85 years. O1 NZ's Auckland plant employs 217 people and plays an integral role in diverting Auckland's glass from the waste stream.

OI NZ wishes to appear before the Select Committee to discuss its submission. In general, Ol NZ supports the Local Government (Auckland Law Reform) Bill (Bill), but there is one issue upon which it wishes to make a submission. In summary, O1 NZ wishes to comment on clause 11(2)(cb) of the Bill, which expands the role of the Auckland Transition Agency (A TA) to oversee the preparation of waste management and minimisation options for the Auckland Council's consideration.

The ATA's role of overseeing preparation of proposals for integrated waste management and minimisation planning and services in Auckland, and developing options for these matters, provides a unique opportunity for key industry stakeholders to assist in the development of a range of innovative options for the Auckland Council's consideration.
OI NZ considers that the current assets and arrangements'for Auckland's waste could be restructured in such a way that would be hugely beneficial for the Auckland Region's waste minimisation targets under the Waste Minimisation Act 2008.

It is submitted that in fulfilling its new duties under clause 11(2)(cb)(ii) of the Bill, the ATA should therefore be required to engage and consult with those commercial operators that are involved in waste management services and major recycling operations. INTRODUCTION This submission is made on behalf of O1 NZ.
OI NZ wishes to appear before the Committee to speak to its submission. OI NZ's contact details are:

ll 7 8

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Brian Slingsby O1 New Zealand PO Box 12345 Penrose Auckland 1642 Phone: 09 976 7117 Email: brian.slingsby@ap.oi.com
lIl

BACKGROUND OI NZ is New Zealand's and the world's leading supplier of glass packaging. Until late 2004, O1 NZ was well known in New Zealand as ACI (Australian Consolidated Industries). OI NZ is a major supplier to the New Zealand food and beverage industries and instrumental to the international success of these industries for upward of 85 years. O1 NZ's Auckland plant employs 217 people.

10

O1 NZ is the only recycler of glass in New Zealand. In 2008, O1 NZ recycled 84,000 tonnes of glass, thereby removing a significant amount of waste from New Zealand's waste stream that would otherwise go to landfill. Packaging manufactured by OI NZ has an average recycled glass content of 65%.

11

OI NZ is investing $80rn in a new furnace for its plant in Auckland. Construction of the furnace has commenced and it is expected to be operational by the end of July 2010. Key benefits of the new furnace will include: 11.1
11.2

creating around 38 new local jobs;

using the latest technology providing energy reduction opportunities, as well as light weight bottle production;

11,3

having the capacity to utilise an additional 70,000 tonnes of recycled glass per annum, adding to the 84,000 tonnes per annum currently recycled and utilised in the process; and ensuring that, where possible, local suppliers and labour are used for this project (current estimate is that this is worth approximately $40 million to Auckland's economy).

11.4

12

In addition to reducing the amount of glass that would otherwise go to landfill, the use of recycled glass in the O1 glass manufacturing processes also reduces CO2 emissions. The use of recycled materials in its manufacturing processes requires less energy than a process using virgin raw materials, thus reducing CO2 emissions (because less soda ash and limestone needs to be metted, therefore reducing the release of CO2 from the melting process).

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13

The nationwide mindshift to embrace recycling glass has been tremendous, but O1 NZ has real concerns with the approaches taken by existing Auckland local authorities to recycling.

14

Under section 42 of the Waste Minimisation Act 2008, territorial authorities have a responsibility to promote effective and efficient waste management and minimisation within their respective districts. Territorial authorities are required under section 43 of that Act to adopt waste management and minimisation plans. These plans must provide for objectives, policies, and methods for achieving effective and efficient waste management and minimisation, including collection, recovery, recycling, treatment and disposal services to meet the district's current and future needs (section 43(2) Waste Minimisation Act 2008).
Four of the seven Auckland territorial authorities have entered into commercial contracts for the commingling of recyclables.' In Auckland, commingling involves the collection of recyclable materials (glass, paper, plastics, aluminium, metals) in one bin. This material is then compacted in the collection and transporting process and taken to a sorting plant. When glass is compacted on collection (to achieve transport efficiency), it often breaks, resulting in different colours of glass being mixed together, along with other recyclable materials. While the glass is sorted at the materials recovery facility (Visy), this process is not as precise as the previous system of manual sorting of glass by colour on collection. The commingling system results in the contamination of glass by colour, noncontainer glass items and general waste. To make clear glass, only clear glass cullet (recycled glass) can be used. Therefore, where colour contamination has occurred, the glass cullet cannot be used by the O1 NZ plant, and because it cannot be recycled, the glass is likely to be diverted to landfill.

15

16

Due to recent changes in the collection of recyclables, there is now a large amount of glass that could and should be recycled, sitting in a pile at Onehunga. There is a possibility that this glass could be used as an aggregate replacement (which does not result in the CO2 benefits associated with using cullet in glass manufacturing, versus raw materials as explained in paragraph 12 above), but the most likely next stop for this large pile of contaminated glass is the landfill. Prior to commingling, the crate system resulted in approximately 2% of collected glass going to landfill.2 Now, with the use of commingling, Ol's global experiences indicate that between 30 and 50% of collected glass cannot be used in the glass container manufacturing process currently.

Auckland City Council and Manukau City Council jointly entered into a contract for commingling with Visy on 1 July 2008. North Shore City Council and Waitakere City Council jointly entered into a contract with Onyx in mid 2005. OI NZ receives colour sorted kerbside collection volumes from the rest of the country and approximately 2% of this cullet is not able to be reused.

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17

In addition to an increase in glass going to landfill, the reduction in the amount of recycled glass being suitable for use at the OI NZ plant means that the plant's carbon emissions will inevitably increase. As a result, this does not meet the Government's aspirations of lowering carbon emissions through the Emissions Trading Scheme. O1 NZ views commingling as being a "waste" model (i.e. collect the waste, and deal with it), rather than a "recovery" model, which would involve a model where recyclables are collected with the intention of producing a high quality end product (with commercial value) for the recycling market. From 1 November 2010, decisions as to how Auckland's waste will be collected and dealt with will pass to the new Auckland Council. Clause 109(4) of the Bill requires the Auckland Council to review the existing Auckland waste management and minimisation plans by 30 June 2012, which is consistent with the 1 July 2012 deadline to review these plans under section 50(1) of the Waste Minimisation Act 2008. O1 NZ is concerned that looking forward from 1 November 2010, the commingling of recyclables will not ultimately achieve effective and efficient waste minimisation for Auckland, as required by the Waste Minimisation Act 2008, and is not a sustainable option for Auckland's future. ROLE OF ATA Clause 11(2)(cb) of the Bill proposes to amend section 13 of the Local Government (Tamaki Makaurau Reorganisation) Act 2009, inserting additional functions and duties of the ATA. These additional functions and duties relate to waste management and minimisation planning and services. In particular, during the transition period (up to 1 November 2010), the ATA is required under clause 11(2)(cb) to:
22.1 Oversee the work, if any, of existing local authorities in the preparation for the first waste assessment that the Auckland Council will make under section 50(2) of the Waste Minimisation Act 2008;

18

19

20

IV

21

22

22.2

Oversee the preparation by existing local authorities of detailed proposals for achieving longterm integrated waste management and minimisation planning and services in Auckland (including any proposals for managing waste contracts, leases, and other arrangements in relation to waste); and Prepare options on these matters for consideration by the Auckland Council.

22,3

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23

OI NZ understands that over the past few months, the ATA has been working on options for a waste strategy that will be considered by the new Auckland Council. OI NZ first approached and met with the ATA's waste consultant on 10 November 2009. At that meeting, O1 NZ discussed issues relevant to the recycling of glass and the problems created by commingling. It was at this meeting that O1 NZ learned that the ATA was developing a waste strategy. At no stage has the ATA discussed this strategy with O1 NZ. Since the November 2009 meeting, O1 NZ has attempted on a number of occasions to engage further with the ATA to discuss both the followup on the November meeting and to discuss the waste strategy, but the ATA has not appeared willing to do so. The ATAs role of overseeing preparation of proposals for integrated waste management and minimisation planning and services in Auckland, and developing options on these matters, provides a unique opportunity for key industry stakeholders to assist in the development of a range of innovative options for the Auckland Council's consideration. In addition to territorial authorities, industry plays a critical role in waste management and minimisation, particularly with regard to recycling. It is important that the ATA properly understands the impact of the economics of recycling and the impact that current commingling practices have on recycling glass.

24

25

26

27

28

OI NZ considers that current assets and arrangements regarding Auckland's waste could be restructured in such a way that would be hugely beneficial for the Auckland Region's waste minimisation targets. If the ATA and the Auckland Council do not review Auckland's recycling strategy in line with best practice methodology, the consequences for Auckland will be significant, as evident in other countries, such as Australia, Great Britain, and the USA. Given the reluctance of the ATA to properly engage with key industry stakeholders, Ol NZ considers it essential that the ATA be required to undertake this consultation in developing the waste proposals to be submitted to the Auckland Council. Such consultation will assist the ATA, and post 1 November 2010, the Auckland Council, to take a more visionary approach to achieving longterm integrated waste management and minimisation in Auckland, by taking into account the role of private industry and the impact of commingling collection practices on the recycling market. Therefore, it is submitted that in fulfilling its new duties under clause 11(2)(cb)(ii) of the Bill, the ATA should be required to engage and consult with those commercial operators that are involved in waste management services and major recycling operations.

29

30

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01 New Zealand Contact details:

Brian Slingsby PO Box 12345 Penrose Auckland 1642 Phone: 09 976 7117 Email: brian.slingsby@ap.oi.com

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REC:E"IV EDi
February 2010 Subinission to:

1 5 FEB 2010 I
Auckland Govem .anceJ L'_kegiganotCommittee
I

The Auckland Governance Legislation Committee

on the:

Local Government (Auckland Law Refonn) Bill

This submission is made in the name of:

Living Earth Ltd (LEL), Captain Springs Rd, Te Papa, Auckland

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LEL wishes to appear before the committee to speak to its submission. In particular LEL wishes to comment on Part 1.11 of the Bill which addresses the functions and duties of the Transition Agency with regard to governance of solid waste by Auckland Council. In summary LEL's position is: The Bill should be amended to provide for Auckland Council the potential consolidation of the solid waste assets, such as a regional organic waste processing facility, into a Council Controlled Organisation rather than a business unit as the Bill presently envisages.

Executive summary
The establishment of Auckland Council provides an opportunity to reconfigure the control and governance of solid waste infrastructure in Auckland. The main driver for the Council is to meet or exceed the objectives of the Waste Minimisation Act 2008 and the associated NZ Waste Strategy which set targets and priorities for local government. Diverting organic waste from landfills is a top priority. Food and garden waste represents about 50% of total waste to landfill; when landfiUed it creates greenhouse gas emissions; and becomes a economicaUy valuable product when converted to compost. Success in waste minimisation and resource recovery is a critical element of the new Council's ambition to be world class city. In LEL's submission, the management of regional solid waste issues should not be dealt with in a piecemeal way. A separate, dedicated COO recommended to be set up to plan and manage regional solid waste matters, including existing JVs, contracts and other arrangements for waste including to facilitate the development of a regional organic waste processing facilit'.

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The amendment to the Local Government (Auckland Law Reform) Bill to enable the creation of a PPP does not commit the ATA or Auckland Council to such a course. It does however provide the new council with the necessary legal instrument to get on with it. Such an opportunity to create the appropriate legislative settings is unlikely to present itself again.

Background The 2009 Royal Commission on Auckland Governance report noted there is need for a regional approach to separation of organic waste from the general waste stream. Organic waste could have a number of end uses including composting and biofuel production. The Commission believes that opportunities like these are not being fully considered because of the fragmented approach of the current governance system. An allofAuckland approach is required to implement these kinds of proposals, because they need to be founded on a combined waste stream, capital investment, and a public education campaign to support separate organic collection. For many years various councils within Auckland region have investigated the need to enhance organic waste processing in the region by diverting food waste from the landfill
Waste Stream.

The drivers for this are: New Zealand commitments to reduce green house gas emissions. Organic waste is the material which creates landfill gas or methane.

The Waste Minimisation Act which seeks to reduce waste to landfill Largescale compost production will enhance the productivity of soils for commercial food production in the Auckland region.
Auckland wishes to be seen as a high performing world class city. However no initiatives resulted because councils could not agree on a united approach. In 2008/09 a group of waste managers representing the councils jointly funded a study for a

Page 57 of 136

regional organic waste processing facility and the Auckland Regional Council completed a Waste Assessment report in 2009. Both reports conclude the development of a regional organic waste processing facility is a priority for the region. This is in line with the objectives of the Waste Minimisation Act and the NZ Waste Strategy and Targets which identify organic waste diversion from landfill as the highest national

pnont'.

Options for organic waste processing in Auckland.

Auckland Council will have several options for facilitating organic waste processing on a regional scale. The options range from an arms length tender process to a PPP between Auckland Council and the private sector. The facility will be capital intensive with a long term operating arrangement and potential commercial risk around sustaining demand for finished product whether it be compost or biofuel. LEL believes these factors would be best addressed by a Council Controlled Organisation with a board of appointed directors. Part 1.11 of the Bill calls on the ATA to oversee the preparation by the existing local authorities of detailed proposals for achieving longterm integrated waste inanagement and minimisation planning and services in Auckland. It is likely these detailed proposals will highlight the need for urgency to develop a regional organic waste processing facility in line with the NZ Waste Strategy and Targets. However the Bill makes no provision for ensuring Auckland Council has an appropriate governance vehicle the City will need to set in place the ownership, operations and governance of such a facility. The bill envisages Auckland Council managing solid waste activities through a business unit. LEL does not believe this is the most appropriate governance model Auckland needs to

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achieve higher performance in solid waste minimisation. Accountability for improved performance is more likely to be achieved though a CCO with appointed directors.

Auckland Waste Stocktake & Strategic Assessment 2009 The Auckland Regional Council's Technical Report No.107 (October 2009) Auckland Waste Stocktake & Strategic Assessment 2009 reported that organic waste, in particular food waste, is the largest remaining fraction of the domestic collected waste that has not yet been successfully targeted for diversion by Auckland. In addition, there are still significant quantities of organic material from commercial sources that could be diverted and put to beneficial use. There has been a major body of workundertaken by the territorial authorities to address both the household and commercial streams. The Auckland Waste Officers Forum, Organic Waste Working Group has undertaken work on technology options for managing organic waste and organic waste collection from households. The report also acknowledged the current model is not ideal for the Auckland region as the private sector has a different set of imperatives to the public sector. For example it notes that at present there is insufficient commercial incentive for privatel'owned facilities to invest in maximising resource recovery from solid waste streams.

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Observations

LEL's observations in respect of this Bill are that: If the Auckland Council is to meet the requirements of the WMA to complete its WMMP by 2010, progress will need to be made over the current transition period. The Local Government (Auckland Law Reform) Bill calls on the ATA to work with the existing councils of the Auckland region over the coming months so that a review of waste plans and options for a new WMMP can be provided to the incoming Auckland Council for consideration and approval within 6 months of its establishment. LEL understands that the ATA is taking expert advice on design options for solid waste infrastructure for the new council to ensure Auckland's performance under the WMA and NZ Waste Strategy which highlights the priority of an organic waste processing facility for Auckland. Under the provisions of the Bill ATA can also have discussions with the industry on the viability of different options for the ownership and governance of solid waste assets in the
region.

It is anticipated that the outcome of these investigations by the ATA will be to recommend that diversion of organic waste from landfill is a priority for Auckland Council. If the new Auckland Council is to consider the establishment of a different working model for solid waste in the region it will need to engage with private industry which may give rise to Commerce Act 1986 issues described above.

Legislative recommendations For the above reasons LEL seeks a new section to be inserted by clause 19C of the Bill as follows:

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19C (1)

Establishment of Auckland waste services agency The Transition Agency must establish a councilcontrolled organisation for Auckland

Council, to be known as the Waste Services Agency, with responsibility for coordinating solid waste services in Auckland. (2) For the purpose of performing its functions, the Waste Services Agency may enter,

carry on or undertake any activity or business, do any act, or enter into any transaction or arrangement. For the avoidance of doubt, this includes joint ventures, public private partnerships or any other arrangements with private entities. (3) Nothing in sections 27, 29 or 30 or in Part 3 of the Commerce Act 1986 shall apply

to or in respect of (a) or any contract, arrangement, or understanding between the Waste Services Agency pursuant to (2) above and one or more private entities, for the purpose of coordinating solid waste services in Auckland; or (b) The negotiation of any contract, arrangement, or understanding so far as it containsa provision relating to the formation of any activity or business described in (3)(a). (4) Section 35G applies to the establishment of the organisation as if the organisation

were an organisation recommended to be established under that section. If the suggested clause 19C above is not to be enacted then, as an alternative, the following alternate clause 19C, should be enacted 19C Application of Commerce Act 1986 (1) Nothing in sections 27, 29 or 30 or in Part 3 of the Commerce Act 1986 shall apply

to or in respect of (a) Any contract, arrangement, or understanding between the Auckland Council or council controlled organisation and one or more private entities for the purpose of coordinating solid waste services in Auckland. For the avoidance of doubt, this includes joint ventures, public private partnerships or any other arrangements with private entities; or

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(b) The negotiation of any contract, arrangement, or understanding so far as it containsa provision relating to the formation of any activity or business described in (1)(a).

Living Earth Ltd

For 15 years LEL has been Auckland's principal regional organic waste processor. The company also built and operates New Zealand's largest food waste composting facility with Christchurch City Council. The company is a joint venture between Transpacific Industries Group (NZ) Ltd and Forte Investments 2004 Limited.
LEL currently provides a garden waste composting facility for the residents of Auckland region, a facility which operates on a market model without contractual arrangements or subsidies with local government. Living Earth has diverted more than 2 million tonnes of material from the nation's landfills, converting it into high quality compost.

LEL has led a number of national studies that have proven the value of compost to New Zealand's productive soils. Compost not only improves productivity, it also reduces the need for commercial growers to apply highly nitrogenous and synthetic fertilizers to their soils resulting in enhanced groundwater and runoff.

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February 2010 Submission to:

The Auckland Governance Legislation Committee

on the:

Local Government (Auckland Law Reform) Bill

This submission is made in the name of:

Rob Fenwick CNZM, Te Matuku, RD1 Orapiu Rd, Waiheke Island, Auckland

I wish to appear before the committee to speak to my submission. In particular I wish to comment on Part 1.11 of the Bill which addresses the functions and duties of the Transition Agency with regard to governance of solid waste by Auckland Council. In summary my submission is: The Bill should be amended to:

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a. provide for Auckland Council the potential consolidation of the solid waste assets into a Council Controlled Organisation rather than a business unit as the Bill presently envisages. b. grant Commerce Act exemption to enable the formation of a Public Private Partnership (PPP) between Auckland Council and private landfill owners to control the regions waste disposal functions. This would deliver waste disposal pricing in the region which captured externalities and provided a realistic threshold under which resource recovery activities such as organic waste processing, would be viable.

Introduction While this is a personal submission, I have a number of roles, present and past in the resource recovery and solid waste sectors. Current chairman of the Waste Advisory Board established under the Waste Minimisation Act 2008. Former f member of the Government working party to develop the Waste Minimisation Act 2008. Former member of the Government Working Party to develop a National Waste Strategy 2000, a precursor to the legislation. Founding shareholder and director of Living Earth Ltd, New Zealands principal organic waste and composting company. Former chairman of the Auckland Regional Council Solid Waste Steering Group 1990.

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Member of Auckland City Council Vision Reference Group 1999. Current Founding shareholder of the Stone Paper Company, the NZ and Australian distributors of Rockstock paper manufactured from waste construction material.

Co-Founder of the NZ Business Council for Sustainable Development Current director carboNZero Former chairman Landcare Research

Executive summary The Government is committed to reducing waste to landfill. The cross party support for the Waste Minimisation Act 2008 illustrates universal endorsement of New Zealands intent to reduce waste.

Reduction of waste aligns with other national strategies including reducing cost to families and businesses; inspiring innovation; reducing GHG emissions; enhancing water quality and promoting energy efficiency.

The Auckland Region produces more waste than any other region in New Zealand, and proportionally more per capita than most. Improving Aucklands waste minimisation performance would significantly enhance New Zealands overall performance. The establishment of Auckland Council provides a unique opportunity to reconfigure the control and governance of solid waste infrastructure in Auckland to achieve the objectives of the WMA 2008, and deliver on Aucklands ambition to be a world class city.

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This Bill should be configured to provide the new council with the necessary levers for this to happen. This is in line with other regions of New Zealand such as Canterbury where solid waste infrastructure has been designed to minimize waste to landfill through partnerships between public and private sectors and a forward looking focus on price signals, operational efficiency and governance. In my submission, this enabling legislation should be amended to provide: The formation of a Solid Waste CCO so it may enter into a PPP or other commercial relationships to facilitate resource recovery and recycling initiatives such as a regional organic waste processing facility, thus accelerating waste minimisation in the new city in line with the WMA 2008 Commerce Act exemption so the ATA can enter discussions with industry participants In my submission, the management of regional solid waste issues should not be dealt with in a piece-meal way. A separate, dedicated CCO should be set up to plan and manage regional solid waste matters, including existing JVs, contracts and other arrangements for waste. The amendment to the Local Government (Auckland Law Reform) Bill to enable the creation of a PPP does not commit the ATA or Auckland Council to such a course. It does however provide the new council with the necessary legal instrument to get on with it. Such an opportunity to create the appropriate legislative settings is unlikely to present itself again.

Background

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Auckland region disposes more than 1 million tonnes per annum of waste to landfills. A sustainable reduction in Aucklands waste disposal would result in a significant improvement in the countrys waste minimisation targets.

There are several impediments to waste ministration in Auckland:

o Market competition between two private landfill owners is producing pricing thresholds that do not capture the external environmental costs of disposal. For as long as this trend continues it will undermine the aims of the WMA.

o Misaligned commercial relationships between Aucklands 11 transfer stations and the landfills resulting in significant haul cost wastage and traffic congestion.

o Misaligned priorities for waste minimisation and resource recovery such as a regional organic waste processing facility, across the region leading to a piece meal and uncoordinated approach and the absence of a regional strategy.

Landfill disposal price drives waste minimisation and sustainable resource recovery and recycling. The average landfill disposal price in Auckland Region is about $60 per tonne and resource recovery struggles to be viable. In Christchurch where the councils and the private sector jointly own the Kate Valley Landfill the disposal price is more than $120 per tonne more accurately reflecting the true environmental cost of disposal.

The disposal price in Auckland is driven down by market competition between two large private landfill owners.

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However landfill companies may be open to a model similar to Canterbury. The new Auckland Council could negotiate a public private partnership with the two companies which would acquire control of the airspace in their landfills and guarantee them a certain commercial return under some NPV purchase arrangement.

Auckland has 11 transfer stations, each with a different ownership structure and a commercial relationship with a different landfill operator. This results in significant haul wastage and traffic congestion across the region. There is scope for rationalising the number of transfer stations and better aligning landfill disposal arrangements.

Various independent reports have highlighted this issue, including the 2009 Royal Commission on Auckland Governance report, which noted that there would be considerable scope for improving Aucklands solid waste minimisation performance through the co-ordination and integration of the regions solid waste management functions. Without solid waste diversion, consumption of available landfill air space will continue unabated. This may well expedite the need for a replacement Auckland landfill with the associated consenting issues and construction costs and amenity concerns.

Specific issues and recommendations

1. Addressing inefficiencies in solid waste management and disposal in Auckland. 2. Addressing the objectives of the Waste Minimisation Act 2008 3. Some specific opportunities for the new Council, including diverting large volume waste streams from landfill

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4. The pathway to implementation.

1. Addressing inefficiencies in solid waste management and disposal in Auckland. The Auckland Regional Council's Technical Report No.107 (October 2009) Auckland Waste Stocktake & Strategic Assessment 2009 concludes the current model for managing solid waste is not ideal for the Auckland region as the private sector owners of disposal facilities, Landfills, have different objectives to those of the Waste Minimisation Act 2008. There are certain public goods that are not provided for under the current model: Increasing solid waste diversion: private sector landfill operators have a natural driver to secure as much solid waste tonnage as possible to fill up landfills and repay investment; Resource recovery: At present there is insufficient commercial incentive for privately-owned facilities to invest in maximising resource recovery from solid waste streams; Collection and transfer efficiencies: solid waste is not hauled in the most efficient way in Auckland as private operators are currently incentivised to use their own landfills and transfer stations. This results in additional traffic congestion and greenhouse emissions as well as leading to increased collection costs.

Furthermore Auckland has 11 transfer stations, each with a different ownership structure and a commercial relationship with a different landfill operator. This is the result of legacy contractual arrangements between the seven local councils and transfer stations and landfill owners.

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This results in significant wastage in waste haul costs and traffic congestion across the region.

There is scope for rationalising the number of transfer stations and better aligning landfill disposal arrangements which would result in a dramatic reduction in cost to Auckland ratepayers. Waitakere City estimates the current 978,000 truck movements per annum could be reduced by 14% minimum producing a saving of $23 million per annum.

The best business model to oversee this rationalisation would be a CCO.

2. The Waste Minimisation Act 2008 and NZ Waste Strategy and Targets The objective of the WMA and the associated NZ Waste Strategy and Targets, is to reduce the volume of waste to landfill and promote sustainable resource use and resource recovery. The facilitate these objectives a waste levy has been introduced with the levy revenue hypothecated to support recourse recovery and recycling initiatives. The Act also enables product stewardship regulations and mandatory data recovery. Under the WMA all local councils are required to a Waste Minimisation Plan with clear targets for reducing waste volumes to landfill. These targets should reflect the NZ Waste Strategy and Target schedule produced by the Ministry for Environment. Auckland Council is required to produce a Waste Minimisation Plan (WMMP) with clear targets for reducing volumes of waste to landfill within a few months of its creation.

3. Some specific opportunities for the new Council, including diverting large volume organic waste streams from landfill

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Diversion of organic waste from landfill is a principal target under the NZ Waste Strategy. The 2009 Royal Commission on Auckland Governance report noted there is need for a regional approach to separation of organic waste from the general waste stream. Organic waste could have a number of end uses including composting and biofuel production. The Commission believes that opportunities like these are not being fully considered because of the fragmented approach of the current governance system. An all-of-Auckland approach is required to implement these kinds of proposals, because they need to be founded on a combined waste stream, capital investment, and a public education campaign to support separate organic collection. The background to this is that for many years, various councils within Auckland region have investigated the need to enhance organic waste processing in the region by diverting food waste from the landfill waste stream. The drivers for this are: New Zealand commitments to reduce green house gas emissions. Organic waste is the material which creates landfill gas or methane. The Waste Minimisation Act which seeks to reduce waste to landfill Large-scale compost production will enhance the productivity of soils for commercial food production in the Auckland region. Auckland wishes to be seen as a high performing world class city.

However no initiatives resulted because councils could not agree on a united approach. In 2008/09 a group of waste managers representing the councils jointly funded a study for a regional organic waste processing facility and the

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Auckland Regional Council completed a Waste Assessment report in 2009. Both reports conclude the development of a regional organic waste processing facility is a priority for the region. This is in line with the objectives of the Waste Minimisation Act and the NZ Waste Strategy and Targets which identify organic waste diversion from landfill as the highest national priority. Cost is a key issue. In Canterbury, where Living Earth operates a state-of the art food waste composting facility with Christchurch City Council, organic waste processing is about the same cost as landfill disposal. In Auckland landfill pricing is as an artificially low threshold due to the competitive market dynamic in the region. This is not sustainable and will accelerate the need for more landfill air space with associated consenting issues and construction costs. Auckland Council will have several options for facilitating organic waste processing on a regional scale. The options range from an arms length tender process to a PPP between Auckland Council and the private sector. The facility will be capital intensive with a long term operating arrangement and potential commercial risk around sustaining demand for finished product if a composting option is pursued. I believe these factors would be best addressed by a Council Controlled Organisation with an board of appointed directors.

4. The pathway to implementation.

Part 1.11 of the Bill calls on the ATA to oversee the preparation by the existing local authorities of detailed proposals for achieving long-term integrated waste management and minimisation planning and services in Auckland.

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The bill envisages Auckland Council managing its solid waste activities through a business unit. I do not believe this is the most appropriate governance model. Auckland needs to achieve higher performance in solid waste minimisation. Accountability for improved performance is more likely to be achieved though a CCO with an independent board. It is likely the ATAs detailed proposals will highlight the need for urgency to develop a regional organic waste processing facility. However the Bill makes no provision for ensuring Auckland Council has an appropriate governance vehicle the City will need to potentially own, operate and govern such a facility. Formation of Waste Services Agency I recommend the Bill be amended to expressly establish a CCO of the Auckland Council in relation to solid waste functions. The objective of this CCO would be to undertake its functions in a way that contributes to affordable, integrated, and sustainable solid waste services in Auckland. This new CCO, in addition to having the full capacity to carry on or undertake any activity or any business to achieve its objectives and functions, would be expressly enabled to enter into such arrangements as JVs or PPPs to facilitate organic waste processing functions. The Bill clearly envisages that Auckland will achieve long-term integrated solid waste management and minimisation planning and services. This is made clear by clause 11, which proposes to amend section 13(1) of the Tamaki Makaurau Act by inserting a new subsection (cb)(ii) requiring the ATA to oversee the preparation by existing local authorities of detailed proposals for achieving longterm integrated waste management planning, including proposals for managing waste contracts, leases and other arrangements. I recommend the Bill should go further, and provide clear direction to the ATA or the Auckland Council to establish a CCO in relation to solid waste management in Auckland. CCOs provide a mechanism by which the benefits generally

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associated with private corporatisation, most importantly transparent cost identification, can be obtained while maintaining public ownership and oversight in relation to the services provided. The Bill already authorises the ATA to constitute CCOs (see clause 24, new section 35G). The Bill also expressly provides for specific CCOs to be established, including a new CCO on transport, to be called "Auckland Transport" (new section 38 of the Auckland Council Act proposed by clause 35 of the Bill), and the "Waterfront Development Agency (new section 19B of the Tamaki Makaurau Act proposed by clause 18 of the Bill).

Conclusion Waste minimisation is an important component of both present and past governments policy. It delivers on New Zealands strategic goals around protecting the nations clean, green branding; reducing greenhouse gas emissions; encouraging innovation and enterprise; and promoting the sustainable use of resources. The greatest opportunity New Zealand has to improve performance in waste minimisation is in the Auckland region. Here the main reasons for under-performance are: The lack of a regional strategy and resulting inefficiencies in transport and waste transfer costs. the artificially low price of disposal at landfills serving he region resource recovery and recycling businesses struggling to be viable under the low disposal price threshold.

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These impediments can be remedied in the legislation to create Auckland Council. The model developed in Canterbury and in other cities around the world, involving PPPs between public and private sectors, are demonstrably successful. There is a unique opportunity to establish such a model in Auckland. It requires enabling legislation to overcome Commerce Commission issues and create the appropriate governance structure within the new Council. It is most unlikely that such an opportunity will be repeated within the foreseeable future.

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CORRESPONDENCE AND INITIAL MEETING MINUTES BETWEEN THE COUNCIL/ ATA AND TRANSPACIFIC INDUSTRIES

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Date; 13 July 2010 Time; 1.30 pm Location; ATA offices Waste consultation meeting between Transpacific Industries Ltd (TPI) and the Auckland Transition Agency (ATA) Minutes of meeting.
Tom Nichols Managing Director TPI Ian Kennedy Special Projects Manager TPI John Dragicevich Manager Infrastructure and Environmental Services, Auckland Council Kerry Connolly ATA Infrastructure and Environmental Services Work stream leader Jon Roscoe ATA Solid Waste Work stream project sponsor

TPI wished to state 3 points.

1. TPI wished to understand what progress has been made by the ATA with
respect to the new councils Waste Management and Minimisation Plan (WMMP) and where the ATA were currently at.

2. TPI wished to understand what the consultative process is for Waste

Disposal Services. (WDS) is an unincorporated joint venture between TPI and Manukau City Council that owns the landfill at Whitford.

3. TPI are concerned that the ATA are relying on 4 reports in compiling the
Auckland Councils draft WMMP, and that these reports contain serious errors, which are misleading and provide misinformation to the team compiling the WMMP draft. These reports are:
ATAs Solid Waste High Level Options Assessment dated March 2010 Auckland Regional Councils Auckland Waste Stock take and Strategic Assessment dated October 2009 Working Draft of Auckland Council Waste Assessment dated February 2010 Waitakere City Council officers report Waste Management in the Auckland Region dated September 2009

These reports were compiled by one or more of the following consulting firms;
Price Waterhouse Coopers (PwC) Morrison Low Consultants (MLC) Sinclair Knight Merz Group (SKM) Waste Not Consulting Ltd (WNC) Eunomia Research & Consulting (ERC)

4. TPI were particularly concerned that the ATAs Solid Waste High Level
Options Assessment compiled by PwC had incorrectly stated they had consulted with TPI in compiling the report. Although no specific reference was made to any such claimed consultation, a review of the PwC report did not substantiate the claim. On numerous ocassions the PwC report clearly implies or states the contrary;

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PricewaterhouseCoopers (PwC) has been engaged to undertake a high level desktop review (page 1) A series of next steps and recommendations have been identified and are set out in Section 6. In summary we recommend: Engaging with key waste industry players to collaboratively discuss and source information so that options to achieve WMA targets can be developed (page 2) Key industry players, including TPI, ESL and Living Earth Ltd, have recently made submissions to the Auckland Governance Legislation Committee. All three organisations have similar views on the key issues raised in this report (page 8) This exercise requires significant data in relation to the waste stream, much of which is not readily available at present. . However, at present availability of such data is limited. There is therefore a need to work with ESL and TPI to collect this information. (Page 11) We recommend the following actions; Engage with key waste industry players to explore their ability to jointly agree: (page 17) Restrictions; In preparing this report and forming our opinion, we have relied upon, and assumed the accuracy and completeness of, all of the information available to us from public sources and furnished to us by the eight existing councils (page 18) Sources of information; In preparing this Report, we have had access to the following: Submissions to the Auckland Governance Legislative Committee, February 2010:..and Transpacific Industries Group (NZ) Ltd (page 19)

5. TPI firmly rejected that any TPI employee was consulted over the Auckland
Regional Councils Auckland Waste Stock take and Strategic Assessment, despite the Acknowledgements section of the same report
The authors would like to thank the following people and organisations for their time and input into the information gathered for this project; Craig Forman (Transpacific Industries), Bruce Horide (Transpacific Industries) (page 7-8)

TPI stated this was not consultation but conceded information was supplied to the report authors and emphasised this was supplied on a confidential basis. The authors of the report have responded;
There was no call for the stocktake team to engage with TPI any further than we did. There were three types of information we needed regarding TPI's operations: o Redvale composition - this was in the public arena in the form of the SWAP audits o Tonnage to Redvale - ARC supplied aggregated tonnage data, and EnviroWaste provided Hampton Downs data. No further input from TPI was needed or sought. o Recovered materials - Craig Forman did not respond to repeated queries for information within the very tight timeframes for the project. TPI were aware of why we were asking for the information and did not request to review the report prior to publishing

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6. TPI were concerned that the ATAs Solid Waste High Level Options
Assessment compiled by PwC had incorrectly stated that TPIs submission to the Auckland Governance Legislation Committee supported Commerce Act/legislative exemption to allow cross industry discussions. It is noted PWC relied on the following extract from page 2 of TPIs submission;
TPI submits that there is a strong case for the enabling legislation to require the Auckland Transition Agency (ATA) and Auckland Council to explore, in conjunction with waste industry participants, the merits of establishing a CCO for the management of Waste. This would create a framework for Council to enter into Public Private Partnerships (PPPs) in the region (e.g. the Transwaste Canterbury model).

TPI orally presented its submission to the Auckland Governance Legislation Committee in March and the Committee report of 24 May 2010 on the Local Government (Auckland Law Reform) Bill (112-2) noted;
Exemption from the Commerce Act 1986 We heard submissions from the waste industry that the bill should be amended to exempt the Auckland Council (and the proposed CCO) from the restrictive trade practices provisions in Part 5, section 58, of the Commerce Act 1986. These submitters argued for the exemption on the basis that they wanted to have exclusive control over waste, through the control of transfer stations and landfill sites. We consider that the current processes, whereby any council proposal that breaches section 58 of the Commerce Act can be approved by the Commerce Commission on the basis of public benefit, are the appropriate mechanisms to obtain an exemption from the restrictive trade provisions of the Commerce Act. We do not consider that the bill should be amended to include an explicit exemption. (page 33)

7. TPI were concerned that references in the reports were misleading and
failed to recognise the waste swapping arrangement between TPI, and their direct competitor Envirowaste Services (ESL), yet the PwC report clearly states;
Given the location of Redvale and Hampton Downs at opposite ends of the city, refuse transfer station operators (primarily TPI and ESL) are understood to use a volume swapping agreement to avoid transport inefficiency. However we have been advised that there are still many inefficiencies in these arrangements that have been confirmed by major industry players3. 3, EnviroWaste Services Ltd, Submission to Auckland Governance Legislation Committee, February 2010 (Page 4)

In addition the Auckland Waste Stocktake and Strategic Assessment report goes further;
With TPIs Redvale Landfill being to the north of the metropolitan Auckland area, and EnviroWastes Hampton Downs Landfill being to the south, the operation by each company of a region-wide network of transfer stations potentially creates transport inefficiencies, with each operator needing to bulk haul waste from one end of the region to the other. This issue has been addressed, to an extent that is uncertain due to the

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commercial sensitivity of the information, by the landfill operators swapping waste from transfer stations. Under this arrangement, both of the landfills are understood to accept quantities of waste from the other companys transfer stations. The waste swapping ameliorates some of the trans-region hauling that would otherwise eventuate and, to an extent undisclosed by the operators, rationalises bulk hauling in the region. For example, some (if not most or all) of the waste from EnviroWastes Constellation Drive transfer station on the North Shore is transported to TPIs Redvale Landfill. Similarly, some (if not most or all) waste from TPIs Papakura transfer station is transported to EnviroWastes Hampton Downs Landfill. Balance is reportedly maintained in the swapping arrangement by the landfill operators monitoring the swap tonnages and, when necessary, diverting bulk hauling from an individual transfer station to the other landfill. Pikes Point transfer station, which is operated as a joint venture by both landfill operators, is centrally-located and waste from the facility could, if required, be directed to either Redvale Landfill or Hampton Downs Landfill to maintain the balance. The swapping arrangement between TPI and Envirowaste has, until recently, been based on contracts entered into every eighteen months. At present, there is no formal contract in place for the swapping arrangement. Although it is a private arrangement between two commercial entities, the waste swapping arrangement is clearly of strategic importance to the efficient operation of waste flows in the region. If this arrangement were to break down for any reason it could result in increases in waste costs, increased bulk haulage movements and resulting congestion and associated negative environmental impacts. (page 23)

8. TPI was informed that the report authors had become aware of the fragility
of the swapping arrangement between parties, and could not rely on this as a means to overcome transport inefficiencies. On reviewing the report EWS had made the following comments;
The swapping referred to in this report relies on economics and goodwill but ultimately on contracts that are entered into every 18 months. As at this time there is no formal contract in place as a result of a continuing dispute over the equity of the shared gains. This shows the fragility of the whole arrangement. There is also is a strong prospect of TPI acquiring Tirohia or entering into a preferred relationship which would put an end to more than half of the swap.

9. TPI were asked whether this arrangement had been examined by the
Commerce Commission to which they confirmed it had. When asked what date the Commerce Commission had examined this arrangement they were unable give a precise answer, and indicated this question is better asked to the previous Managing Director of Waste Management Ltd.

10. When questioned further as to any possible legal issues as a result of the
waste swapping arrangement TPI were directly asked how any mass imbalance issues are dealt with between the two companies to which TPI stated that they were minor and of no consequence. TPI were asked if there is any financial transaction between the two companies as a result of the waste swapping arrangement to which they stated there were none. TPI were again asked if there is any invoice raised between the two companies as a result of the waste swapping arrangement, be it on a monthly or annual basis. TPI again confirmed that there is no invoice, nor transaction between the two companies as a result of the waste swapping arrangement.

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11. Notwithstanding the waste swapping arrangement TPI rejected that any
transport inefficiencies exist in the Auckland area as stated in various reports. When TPI were asked to quantify what transport inefficiencies do exist they stated nothing of significance, when questioned whether this is of such a small volume it would not be worth mentioning they agreed that it is not worth a mention. Page 2 of TPIs submission to the Auckland Governance Legislation Committee however states;
This would create a framework for Council to enter into Public Private Partnerships (PPPs) in the region (e.g. the Transwaste Canterbury model) This may assist with improving transport efficiencies in the waste sector and also assist Council with achieving its long term waste minimisation objectives

12. TPI also stated that it is misleading to state in the report that kerbside
waste collected on councils behalf does not bypass up to three other transfer stations to dispose at a nominated facility as it failed to recognise other factors such as capacity. In addition TPI states that North Shore City waste is disposed of at the closest landfill. Whilst this is true it is also a fact that, by way of example Devonports domestic waste will bypass Devonport RTS, Constellation Drive RTS, Rosedale RTS and Silverdale RTS to dispose directly and inefficiently at Redvale Landfill.

13. The ATA waste project team are aware at the time these reports were
compiled that waste collected from Auckland City Council was also directly transported to Redvale landfill when up to seven other Refuse Transfer Stations are closer to the point of collection. TPI claimed that in many cases it was more efficient to directly transport this waste to Redvale as opposed to consolidating loads at a RTS When TPI were questioned what volume of domestic collected waste they permit, or is permitted to be disposed of in the centrally located Pikes Point refuse Transfer Station they declined to answer citing commercial sensitivity. An audit of all Auckland waste contracts reveals that no domestic waste is disposed of at the Pikes Point Refuse Transfer Station despite its ideal proximity for domestic waste

14. TPI stated that the figure of 1.4 million tonnes of waste disposed of from
the Auckland Region is factually wrong and misleading. TPI stated that waste from the Auckland Region has reduced by 20% since 2008 and that the waste disposed of at Hampton Downs comes from south of the Auckland Region not from Auckland and therefore, based on their own knowledge of their competitor TPI confirmed there has been a 20% reduction in waste in the Auckland Region over the past 3 years.
[The ATA Waste Project Team however have information from EWS that Hampton Downs receives greater than the 20% of 1.4million tonnes of waste from the Auckland Region.]

15. TPI stated that they would like the WDS arrangement with MCC to extend
to the new council and to include the Redvale Landfill

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16. TPI stated that during inception of the WDS arrangement with MCC was
with the understanding amongst the councils in the region that it would become the disposal facility for those councils. It was pointed out to TPI that on behalf of the WCC representatives in the meeting that no such arrangement or understanding existed.

17. TPI stated that any Public Private Partnership between council and the
landfill companies should simply extend on the current CCO governing the WDS facility. And this PPP should not include Hampton Downs as their landfill is outside of the Auckland Region. It was pointed out to TPI that the owners of Hampton Downs, EWS also operate a large number of transfer stations in the Auckland Region, so the locality of Hampton Downs is of little consequence.

18. The option of the Auckland council having a greater control of the RTS
market to further influence waste reduction was put to TPI who suggested that the current kerbside collections are already removing most recyclables from the waste stream, therefore there is little need. When asked what volume of waste comes into TPIs Rosedale Road facility, against what is sent to landfill they declined to answer due to commercial confidentiality. When asked just to give a percentage of waste reduction they declined to provide this.
[Note; although not raised in the meeting it should be noted that the Solid Waste Analysis Protocol (SWAP) weight audits of all seven Auckland local councils' domestic kerbside refuse collections shows; The proportion of materials that could still be recycled, using the existing kerbside recycling services, varied between 11% and 28% in the seven audits. The proportion of materials that could be composted varied between 38% and 50%. The proportion that was potentially divertable from landfill disposal (either through being recycled or composted) varied between 60% and 66%.]

19. TPI stated that they position themselves to compete against councils
kerbside collections as they see this as healthy competition for the consumer to; get cheapest waste disposal options when pointing out that this practise is contrary to the National Waste Strategy, including the current governments own environmental party policy that states;
In other places local authorities have been proactive in establishing user pays, safe waste disposal policies and kerbside recycling facilities. But their efforts are sometimes being undercut by waste companies offering a cheap, bulk wheelie bin service, which effectively removes the incentive on households to segregate their wastes for recycling. Again this is possible because these operators are not being charged the full costs of meeting the communities waste management objectives (Chapter 15, National Party Blue Green Policy)

20. TPI stated their preference not to collect kerbside waste manually as this
practise is considered an extreme risk to Health and Safety. TPI clarified that manual collections did not include manual collections from Low Entry Vehicles (LEVs)

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29 October 2010 Tom Nickels Managing Director Transpacific Industries Group (NZ) Ltd Private Bag 14919 Panmure Email: Judy Scott [JScott@transpac.co.nz] Dear Tom, Thank you for your letters of 27 July, and 20 August 2010. Apologies for any delay in replying to them, however, I have been aware that you have had further opportunity to have input to the preparation of the draft WMMP via meetings with Jon Roscoe and the team preparing the draft proposal. With respect to some of the issues you have raised in your correspondence I have responded below. Letter of 27 July. With respect to the meeting on 13 July 2010, ATA was represented by John Dragicevich, as Manager Infrastructure and Environmental Services, for the new Auckland Council, Kerry Connolly ATA Workstream Leader and Jon Roscoe representing the Auckland Transition Agency. Jons role has been as Project Sponsor for Solid Waste in the ATA Infrastructure and Environmental services work stream. Amongst the tasks Jon has been assigned is overseeing the preparation of the new councils draft Waste Assessment and draft Waste Minimisation and Management Plan. Jon has since been appointed as Solid Waste Business Unit Manager to the new Auckland Council. With respect to some of the issues you have raised in your letter I have responded below. Only one of the reports you refer to is the property of the ATA and in final form. That is the PwC report and it makes no reference to having ever consulted with any of the industry members; in fact on numerous ocassions the PwC report clearly states the contrary. With respect to the ARC or WCC reports these have been prepared by those agencies and ATA has had no involvement in that process. I have however viewed correspondence from one of the ARC report authors who states;
o There was no call for the stocktake team to engage with TPI any further than we did. There were three types of information we needed regarding TPI's operations: Redvale composition - this was in the public arena in the form of the SWAP audits Tonnage to Redvale - ARC supplied aggregated tonnage data, and EnviroWaste provided Hampton Downs data. No further input from TPI was needed or sought. Recovered materials - Craig Forman did not respond to repeated queries for information within the very tight timeframes for the project. TPI were aware of why we were asking for the information and did not request to review the report prior to publishing

Thank you for your clarification over your submission to the Auckland Governance Legislation Committee. I am confident you will appreciate how easily this was misinterpreted by PwC and indeed the Legislation Committee who noted a similar interpretation in their Committee report of 24 May 2010. I understand four waste companies submitted to this process, of which only one is independent from TPI.

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With respect to transport inefficiencies it is accepted that there are examples of transport efficiencies throughout the Auckland Region however our notes from the meeting indicate that you stated inefficiencies were not worth mentioning. However there are general views from a variety of sources that inefficiencies occur and note that in reviewing the councils recent contract extension process we have examples of these transport inefficiencies. I recall Jon Roscoe expressing a view on the different objectives between the private waste operators and the councils when it comes to recycling, and indicating that councils recycling includes a wider range of products and is undertaken regardless of commodity value. If you have taken this as a criticism toward TPI I am confident that was not the intention. We assured you that there would be further consultation with key stake holders during the preparation of the new councils Waste Minimisation and Management Plan and I understand that Jon Roscoe, Parul Sood and Ewen Skinner met with you in September to better understand TPIs position. Once the new Auckland Council considers the Draft WMMP there will be a special consultative process which will enable you to make formal submissions. It is the intention to include all views from key stakeholders in the consultation summary. This will include submissions to the legislative committee, together with all relevant correspondence, written and oral. Regarding TPIs recycling I dont believe that Jon Roscoe expressed the view made in your point. However if you wish to provide details of recycling volumes it would be extremely beneficial if this were confined to your Rosedale Road facility. I do recall Mr Kennedy stating this information was commercially sensitive so if you were just to provide the percentage difference between all this facilities incoming tonnes, to outgoing landfill tonnes for the past four years then we would welcome this. Comments on your Appendix A are as follows: Waste Volumes You have indicated that landfill tonnes from Auckland have reduced by 20% between 07/08 and 09/10. What you have not indicated however is; o o The reliability of information from your competitor Envirowaste Services total landfill tonnes from Auckland. Why this reduction has occurred. Historically waste volumes have been directly related to economic activity. Given the recent economic recession, do you consider this in any way connected to the decline in volumes over the past few years?

You have presented a table of Council tonnes to landfill presumably to reinforce this suggested decline, demonstrating Manukau City Council at 16.9% with North Shore City Council at 13.4% and finally Waitakere City Council at 26.6%. I suggest in this case you are not comparing similar waste streams. WCCs comparative figure is only 9.2% and we note the explanation was given to you at the meeting stating price increases at WCC RTS had ensured similar volumes simply moved to Patiki Road. It is also interesting to note that all three councils put the recent decline of council waste down to the recent economic recession.

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Waste Flows You also state; Given most councils already have kerbside recycling, there is little opportunity with this waste stream. Already reduced see tonnes above. Although we did not respond to this claim at our the meeting it should be noted that the Solid Waste Analysis Protocol (SWAP) weight audits of all seven Auckland local councils' domestic kerbside refuse collections shows; The proportion of materials that could still be recycled, using the existing kerbside recycling services, varied between 11% and 28% in the seven audits. The proportion of materials that could be composted varied between 38% and 50%. The proportion that was potentially divertible from landfill disposal (either through being recycled or composted) varied between 60% and 66% You raise the issue of the waste flow diagrams contained in several reports and claim that the thickness of the arrows represents the tonnage volume. I clearly recall you being advised at our meeting that the thickness of these diagram arrows did not claim to represent, and did not represent tonnage volume. Finally any further clarification on the waste swapping arrangement between yourselves and Envirowaste Services Ltd. (ESL) You stated at our meeting that: There is no financial transaction that takes place between these TPI and ESL as a result of, or in relation to this waste swap arrangement o This swap arrangement had been considered and accepted by the Commerce Commission. It would be useful if you are able to confirm these two points. o Letter of 20 August. You have raised three issues in this letter that are; Waste flow diagram. TPI Recycling graph and WDS. With respect to WDS; I have read WDSs written submission to the Auckland Governance Legislation Committee, and Ian Kennedys email to me dated 7 April 2010 and you continued inferences of a proposal. I suggest if you have an offer to make then I recommend you detail this in writing so the Auckland Council representatives may consider it. With respect to TPI recycling. As earlier mentioned it would be beneficial if you were to provide data of; waste in Vs waste to landfill at your Rosedale Road facility as opposed to providing the incomplete graph you have enclosed. Waste flow data. You appear to have made an error in these charts. There appears to be no representation of the 20,000 tonnes of North Shore City Council domestic waste that goes directly to your Redvale landfill Any further correspondence on solid waste issues should be directed to Jon Roscoe at Auckland Council

Yours Faithfully

Kerry Connolly

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COPIES OF MINUTES OF PRELIMINARY CONSULTATION MEETINGS WITH WASTE INDUSTRY KEY STAKEHOLDERS

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Auckland Council Waste Assessment Development Preliminary Consultation 3rd September 2010 Carter Holt Harvey (CHH) Attendees: CHH James Flexman (JF) (Manager Full Circle Recycling) Auckland Transition Agency/ Auckland Council Ewen Skinner (ES) (Morrison Low) 1. Overview Overview of process provided key points (also noted in letter dated 9th August 2010): Auckland Transition Agency (ATA) has a statutory requirement to oversee the work on the first waste assessment for the Auckland Council. This is currently being developed with Morrison Low and Associates, engaged to facilitate this process on behalf of the ATA. At this stage a round of preliminary consultation is scheduled to be undertaken to inform the development of the Waste Assessment (WA) and Waste Minimisation and Management Plan (WMMP). Statutory consultation will be undertaken when the WA and WMMP is formally notified. This preliminary consultation round is being targeted at key stakeholders who meet a number of agreed criteria. Notes will be taken and will be included within the WA along with any other correspondence to date. Outlined timeframes / process: WA draft is to be prepared over the next 2 months. WMMP is required to be signed off by June 2012. The key consideration is funding options user pays or rates funding. There are no definite options at this stage. Council is not committing to any further consultation beyond what is required under legislation. 2. CHH Views James Flexman (JM) provided an overview. Key points were:

CHH is primarily interested in the areas of recycling the company has collected paper in the Auckland region since the 1950s. Since the Visy contract commenced, CHH has not received paper from the Auckland or Manukau City Council areas. CHH would prefer for paper to go from Visy to CHH if the quality and price was right. Currently CHH is importing paper from the South Island and elsewhere in NZ which is not as cost efficient. Current capacity in Penrose is 100,000 tonnes p.a. (paper/cardboard) and Kinleith is 125,000T p.a. (cardboard). Demand within NZ is around 240,000 tonnes p.a. with supply at about 550,000 tonnes p.a. the excess is exported. The biggest issue with sourcing paper from Visy is contamination by glass. Material from Visy has to be reprocessed which is expensive.

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It is noted by CHH that collection methods are changing in some areas within NZ. CHH is currently working on assessing the pros and cons for a separate glass collection service. CHH in conjunction with Envirowaste Services Limited (ESL) have won both the Dunedin and Wellington City Council contracts and both have separate glass collections. With regard to the Auckland market, CHH has been analysing the extra costs to run a second fleet in Manukau. Initial calculations indicate that there will be an additional $2 million cost, but the benefits will outweigh these. The separate collection will result in increased quality and therefore a premium on the paper and other materials. Further discussion around costs noted that if the additional cost for a separate glass collection was approximately $40 per tonne, then the benefits would easily match this. Discussion around costs for beneficiation and it was noted that currently Owens Illinois NZ Ltd (OI) purchase colour sorted glass from Visy. OI pay $75 per tonne for glass with costs of about $60 per tonne incurred by Visy to produce. This results in a net benefit of $15 per tonne to Visy. Believe that there will be a net benefit of $75 per tonne to Visy if colour sorted at kerb. Action: JF to send through a spreadsheet detailing these calculations. Noted that there will be significant reduction in Materials Recycling Facility (MRF) costs by JFs calculations in order of $10 per tonne or $500,000 p.a. saving in maintenance

Q The contractor for Waitakere City Council (WCC) and North Shore City Council (NSCC) is dissatisfied with the 3rd party arrangements that they have currently in place and would not be disappointed if regional rationalisation did not include continuing these contracts. What is CHHs view on this? A The Penrose Mill would be unsustainable if the WCC/NSCC contracts were lost, it would likely have to close. Currently 18,000 tonnes per annum from NSCC/WCC arrives in a loose form. If we had to take materials and reprocess them, then this would not be viable. It does however make sense for NSCC/WCC materials to be processed in Onehunga, but to a standard that CHH can use. Q Indicatively the costs to Council for a separate glass collection have been estimated at $40 per tonne. Bearing in mind there are a number of parties who will benefit, who should pay this additional cost? A - View is that OI, Visy and CHH (if it gets material) will all benefit, and therefore should pay. View is that this additional service will at least be cost neutral. CHH would pay more for the Visy material if it is not mixed with glass. Q The view from other industry players is that Penrose Mill is substandard it is old and does not handle glass contamination. What are CHH views? A Would agree with that assessment. It is noted that overseas plants can deal with glass contamination, but there is high ongoing operational / maintenance cost with this. The reality is that in the scheme of things, Penrose is a small old Mill which economically is not worth reinvesting in. It would be unlikely to get approval from the CHH Board/Senior management for any significant capital improvements. Q What areas should the Council focus on with regard to Education? A From CHHs own research / focus groups the impression is that people are astounded that material is not reprocessed in NZ in our view the public would be willing to pay more to ensure that this happens. There also need to be focus upon increased

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recycling and the ability for Auckland to also service other areas around NZ. Also issues of glass with respect to contamination.

Q There have been lots of comments regarding the Visy operation what are CHHs views? A Our view is that the plant has underperformed to date. The glass sorting and beneficiation plant should sort out any existing issues. There have been discussions with the plant designers, and it is believed that there is a 40% loss of glass (via fines) due to the system. This material is recycled as aggregate or other activities (lower economic uses) but is not suitable for recycling into bottles. The original MRF design is not quite right but improvements have been made. Q Any other issues that CHH have views on? A Collection methodology using runners on the street is not appropriate. Low Entry Vehicles (LEV) need to be used with driver sorting if required. There is also the need to look at the methodology being rolled out in Wellington and Dunedin. This is a 240L Mobile Recycling Bin (MRB) mixed (except glass) fortnightly collection with 65L crates for glass fortnightly With respect to the number of bins for ratepayers it is our view that four is reaching the limit of individual bins.

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Auckland Council Waste Assessment Development Preliminary Consultation 2nd September 2010 Envirowaste Services Limited Attendees: Envirowaste Services Limited (ESL) - Malcolm Page (MP) (Board member) and Phil Ellis (PE) (Auckland Transfer Stations Manager) Auckland Transition Agency / Auckland Council Jon Roscoe (JR), Parul Sood (PS), Ewen Skinner (ES) (Morrison Low) 1. Overview Overview of process provided key points (also noted in letter dated 9th August 2010): Auckland Transition Agency (ATA) has a statutory requirement to oversee the work on the first waste assessment for the Auckland Council. This is currently being developed with Morrison Low and Associates, engaged to facilitate this process on behalf of the ATA. At this stage a round of preliminary consultation is scheduled to be undertaken to inform the development of the Waste Assessment (WA) and Waste Minimisation and Management Plan (WMMP). Statutory consultation will be undertaken when the WA and WMMP is formally notified. This preliminary consultation round is being targeted at key stakeholders who meet a number of agreed criteria. Notes will be taken and will be included within the WA along with any other correspondence to date. Outlined timeframes / process: WA draft is to be prepared over the next 2 months. WMMP is required to be signed off by June 2012. The key consideration is funding options user pays or rates funding. There are no definite options at this stage. Council is not committing to any further consultation beyond what is required under legislation.

2.

ESL views Q Council is seeking views on control (influence) options and on separate recyclables collections i.e. source separated glass. Who should pay for this if there is additional cost? A ESL is happy to work with any option Council proceeds with. It is noted that we need to work collaboratively with Council. If the two compete, then this runs the risk of not achieving outcomes. Agree with separate glass collections to increase the value of products, however, believe that those that benefit from this should contribute to the cost, and if there is an additional cost to Council then Council shouldnt be providing this service. Q What are ESLs views on organics? A - Foresee food / greenwaste collections in the future provided through Council or others. Still see some of the organics stream continuing to go to the landfill which will allow generation of some gas and power, though unsure of the alignment with the Waste Act and the efficiency of this approach. Can also foresee green cells at landfill as an option. 1

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Q There is a view about the benefits of organics being diverted from landfill i.e. carbon and nutrient arguments (issue identified in 2007 State Of the Environment report,) and also issues around difficulties in selling the product once compost is produced. What are your views on these issues? A Agree that there are benefits in diverting organics from landfill. There are technical issues in developing plant to produce compost and obtaining markets. Ideally we would want to see a variety of solutions. Q In ESLs view, how effective has waste reduction to landfill been over recent years in the Auckland region? There are some claims that 20% reduction has already been achieved. A - Waste may have reduced by 20% over the last 3 years but this is not due to successful diversion initiatives. It is primarily due to the economic downturn which typically results in reduced consumption. There have not been significant waste diversion increases as financially they are hard to make stack up. Q While the commingled recycling service has increased diversion quantities, Council noted that its statistics indicate a further 20% diversion of recyclables is possible. What are your thoughts on this? A Agreed that higher diversion quantities could still be achieved. More waste education is critical to help achieve this. Q - What other opportunities are there to reduce waste to landfill? A - View is that the private sector can play a role with Council the private sector can provide funding and intellectual knowledge. There are also issues of health and safety and infrastructure that need to be dealt with. Regulation also has a role to play. There is the need for good local regulation such as licensing to get rid of cowboy collectors which is highly desirable. Q Does ESL believe that the current collection / Refuse Transfer Station (RTS) market serving the Auckland region is efficient? A No it is not. If no waste swap arrangement were in place then there would be a bigger mess. Even with these in place it is still not efficient. Pikes Point is an example it is an underutilised facility although in a very good location. It takes only minor domestic waste although it has the capacity to take all the local areas waste. Essentially, it is not serving the local area, with waste being transported to other further located facilities. As a consequence there have been difficulties maintaining payload weights at the facility. The existing agreements need to be improved. Q What are your views on the coordinated use of the existing RTSs for a Resource Recovery Centre (RRC) network? A This is a good idea. We view Public Private Partnership (PPP) arrangements positively. Council does not have to have ownership, but could have a lease / contractual arrangement, with landfills and RTS being both in the mix. Would like to explore options for joint arrangements. ESL would be keen to discuss with Council and open dialogue with TransPacific Industries (TPI) Q Another issue facing Auckland is that landfill rates are seen as to cheap. This as a consequence, undermines waste reduction activities. What are ESLs views? A We agree with this statement. It is difficult to get waste diversion / minimisation to stack up financially against the low landfill gate rates.

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Q Do you have a view on Whitford Landfill how would you see this fitting into Auckland Councils plans? A Our view is that we need to weigh up costs and benefits and make a decision based upon the financials.

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Auckland Council Waste Assessment Development Preliminary Consultation 2nd September 2010 Glass Packaging Forum Attendees: Glass Packaging Forum John Webber (JW) (General Manager) Auckland Transition Agency / Auckland Council Jon Roscoe (JR), Parul Sood (PS), Ewen Skinner (ES) (Morrison Low) 1. Overview Overview of process provided key points (also noted in letter dated 9th August 2010): Auckland Transition Agency (ATA) has a statutory requirement to oversee the work on the first waste assessment for the Auckland Council. This is currently being developed with Morrison Low and Associates engaged to facilitate this process on behalf of the ATA. At this stage a round of preliminary consultation is scheduled to be undertaken to inform the development of the Waste Assessment (WA) and Waste Minimisation and Management Plan (WMMP). Statutory consultation will be undertaken when the WA and WMMP is formally notified. This preliminary consultation round is being targeted at key stakeholders who meet a number of agreed criteria. Notes will be taken and will be included within the WA along with any other correspondence to date. 2. Glass Packaging Forum views

Overview provided by JR and ES Q - Owens Illinois NZ Ltd (OI) have identified that there are issues with glass contamination in the comingled recyclables collection. If there was to be a separate glass collection system a view is that it will be less convenient and more expensive. It is likely that additional costs could be in the order of $40 per tonne to provide this service, who should pay the costs and promote the benefits vs. lower convenience to the ratepayer? We are seeking the Glass Packaging Council Forums (GPF) views on this and other issues.

A We are encouraged that separate glass collection is an option. When the GPF was formed there was a general glass issue. There was a need for a non commercial body that had the ability to talk to users / parties rather than OI. There was a need for a wider body not only glass manufacturers. Part way through the process, issues of comingling and OI having surplus material were identified. This was different from the original issue. The role has changed. While still dealing with issues in South Island (finding markets for the material), issues are now around comingling. Previously NZ had import licencing and as a consequence could not import glass without approval. It is a different commercial environment now with companies competing on the international market and significant importation occurring. In reality, the Glass Packaging Forum has limited reach. Q What are your views on OIs involvement and responsibilities? Would OI pick up glass from the kerb? It is noted that Council only has control over 12% of the waste 1

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stream. An explanation was made on options for greater influence over the waste stream primarily around Council having the ability to have a network of RRCs. It was also identified that Council is currently meeting its obligations to divert from landfill and that higher value diversion results in additional costs who should pay for these? A The focus should be on increasing the percentage of material removed that goes to high end users. There is a lack of understanding in what happens to glass currently and the public should be better informed. Our view is that all parties i.e. ratepayers, OI, Visy etc, should and would be prepared to pay extra how much is yet to be quantified. We are unsure if OI would be prepared to collect from kerb Q Where should Auckland Council focus its attention with respect to waste education? A The focus should not be on one single material, the public need to believe that what we are doing is worthwhile. That is the key message. Q What are your views on a campaign to return packaging to where it is purchased? A We do not object to this as a concept. There will however be issues in achieving this. Product Stewardship is a shared responsibility, manufacturers, suppliers and consumers all have a responsibility, but the onus needs to be put on the industrial sector. It is noted that currently there is no direct control over imported materials for glass containers only 50% are produced by OI as a result we do not believe that you can hold OI solely responsible for recycling glass

JW explained how the GPF operates: Currently the GPF has a voluntary levy for members in three areas as follows: o Empty containers $1.30/T works out to 0.02c per average bottle o Fillers $1.30/T o Retailer $1.30/T The GPF has influence on around 80% empty containers captured by the groups above. Ideally want to capture at all three points (but in reality, it is much less than that often only one) The GPF has limited influence on retailers, we only capture major retailers, businesses, wineries. We do not capture all those retailers that OI supply to. GPF is run by 4 part time staff. Spending to date on projects has been focused on infrastructure, crushing glass and NZTA lobbying. More generally the GPF responds to requests from members. Members have a strong financial commitment if anyone drops out then GPF will notify the Minister. Currently there are 100 members which raises approximately $700,000 per annum. This contribution could potentially double if we could effectively impact on the three key areas above. 230,000 tonnes of consumer glass per annum and growing slowly (including jars) The Mass balance equation is as follows: Export empty
Imported glass

OI

Made for NZ market Fill to NZ Fill to export

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The $40 per tonne additional collection costs should be shared. It is noted that costs of alternatives (importing) are more expensive. The GFP cannot subsidise, but will put funds towards education or infrastructure. It is noted that in his view, the Mobile Recycling Bin comingled collection has resulted in a degradation of materials for recycling.

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Auckland Council Waste Assessment Development Preliminary Consultation 3rd September 2010 Living Earth Ltd Attendees: Living Earth Ltd - Rob Fenwick (RF) (Director), George Fietje (GF) (General Manager), Steve Wilson (SW) ATA / Auckland Council Jon Roscoe (JR), Parul Sood (PS), Ewen Skinner (ES) (Morrison Low) 1. Overview Overview of process provided key points (also noted in letter dated 9th August 2010): Auckland Transition Agency (ATA) has a statutory requirement to oversee the work on the first Waste Assessment (WA) for the Auckland Council. This is currently being developed with Morrison Low and Associates engaged to facilitate this process on behalf of the ATA. At this stage a round of preliminary consultation is scheduled to be undertaken to inform the development of the WA and Waste Minimisation and Management Plan (WMMP). Statutory consultation will be undertaken when the WA and WMMP is formally notified. This preliminary consultation round is being targeted at key stakeholders who meet a number of agreed criteria. Notes will be taken and will be included within the WA along with any other correspondence to date. 2. Living Earth views

General discussion around process. Points to note were: Options are to be presented to Council by April 2011. There are issues around user pays / rates funding. Options identified will pre-determine this. For a regional facility such as a composting facility, the timeframe could be 2015 considering other initiatives and the new Auckland Council. Living Earth views GF Living Earth has definite views on collection and processing options and would like to provide further information to the Auckland Council on these. RF Provided a high level summary. In both his, and Living Earths view, the biggest opportunity to reduce waste to landfill is through kerbside organics separation. This is aligned with the Waste Act, current NZWS and the proposed NZWS. It also aligns with targeting environmental harm where the removal of organics from landfills, results in reduced leachate and gas production in landfills The focus needs to be on the most beneficial use of materials. The value of compost in the restoration of soils is significant, i.e. value of carbon and organics to arable fills. This is

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particularly relevant to areas in Auckland e.g. Pukekohe etc. The associated reduction in nitrogenous fertiliser use is also a significant benefit. Over the last fifteen years Living Earth has been looking at options/opportunities for a regional composting facility. They have looked at one in the North-East and/or one in the South-West of the Auckland region. The argument for one facility is compelling from a cost/operation basis, however they have had difficulties to date which has restricted progress. These difficulties are essentially: 1. Auckland has extremely low landfill prices (in fact the rates are artificially low). They ignore the cost of externalities. 2. Coordinating individual councils has been difficult for an initiative that covers multiple councils in the Auckland region. In Christchurch, problems were addressed when Kate Valley and the Councils all got together. One political voice and a fair landfill price occurred as an outcome, and meant things could get done to divert organics from landfill. Q - Why is there a focus on reducing waste to landfill? A There is a focus to reduce some waste streams to landfill as these materials can be used beneficially rather than dumping. Some waste streams cause environmental harm. Landfill owners/operators argue that organics should go to landfill as they produce gas which can be reticulated and used in a beneficial manner i.e. it reduces environmental harm; however we do not agree with this argument. In reality, gas collection only collects a proportion of the total gas produced, possibly 85% at best, but is likely to be a lot less. Additionally, locking up the valuable carbon resource is definitely not environmentally beneficial and this is a significant issue. This resource is lost forever and cannot be used. Q There have been arguments that the costs for a farmer to spread compost are prohibitive. What are Living Earths views on this? A This is not the case in Living Earths experience. In Canterbury, where arable farming (low value) is prevalent, it can be economically achieved. Living Earth have met the market commercially ($10 per tonne ex facility). At the time of spreading, the costs are less than that for fertilizer. RF The production and application of compost to agricultural markets is a model used successfully worldwide. In New Zealand, the supply of compost has only recently become available and it takes a while for farmers to change methods. The business case needs to be proved and the experience in Canterbury has proved it. Q The Wellington organics initiative was a failure. What are Living Earths views on this? A In Wellington, the organics process was a more costly initiative than to landfill the materials. The cost of the technology that was implemented was high, being an in-vessel arrangement, and bio-solids inclusion also created difficulty. It is Living Earths preference that bio-solids not be included in the mix but it was noted that overseas models can use biosolids. The market has learned from the Wellington experience. Q - What would Living Earths preference be for an Auckland organics facility?

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A Preference would be for a modular composting plant with the ability to expand over time. Market competition is highly desirable at the collection end but not at the processing / disposal end. It is noted that this type of arrangement is best owned and managed in a structure where there is a public good focus rather than solely commercial focus Christchurch is a good example of this. Whatever Council decides to do with composting it needs to be a modular facility to deal with growth. Q There is a view that if there is a removal of market conditions (i.e. competition in some market sectors relating to waste) there is a risk of a monopoly developing. What are Living Earths views on this? A Living Earths view is that the political 3 year cycle is a check/balance for pricing. Local Government is well positioned to ensure this balance. Q Where should Auckland Council focus waste education? A There are two risks to resource recovery and recycling 1. Contamination of inflow stream and 2. Sustainable markets for finished products. These are areas to focus education on. 1. Contamination is influenced by public information / education and needs to be well targeted. Christchurch has 1-2% contamination in organics which is very low when compared to figures of 10% elsewhere overseas. Living Earths view is that there is a need for a mix of enforcement and education, i.e. videos on trucks and 3 strikes scenario. There will also be the need for field officers to police, particularly during the start up phase. 2. Markets are a key component and is a legitimate commercial risk. Where public good is an element, then Living Earths view is that this needs to be supported by the public. This will lead to joint public / private ownership. Q Is the current organics collection market running efficiently? It is noted that the Auckland Council is aware that there are RTS inefficiencies relating to contractual and loyalty agreements. A Living Earth is also aware of inefficiencies in the waste markets generally. From an organics perspective, the market is running reasonably efficiently with collectors generally going to the closest RTS / facility. From a collection perspective it is not that efficient as there are potentially three service providers servicing same street. This also results in difficulties in achieving route density so collectors getting squeezed.

Concluding Living Earth views: Living Earths view is that there is an option for garden waste / food waste (bin size will dictate) to be collected by Council. Excess garden waste to be allowed to be collected by private suppliers. It is noted that the bin size would be dictated by the frequency of the collection. You could have a fortnightly food/garden waste collection (approximately 80litre size receptacles)

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though there may be minor odour issues. In Living Earths view, these issues will be acceptable when weighed up against benefits. The 140 litre receptacle examples that Living Earth are aware of are underutilised from both a set out and capacity perspective. There is a need to coordinate refuse and organics collections so issues of choice/convenience do not impact upon the organics collection service. Require mixed green / food to allow fortnightly collection. There is no point in putting more organics waste into a tunnel system than you need to. You can compost this material at a cheaper rate. Believe that a three bin system is acceptable to households. No one is currently offering composting which includes paper. Note that there can be contamination issues so only small quantities of paper can be catered for. Living Earth also noted that resource consent conditions under which those in Waikato operate (as opposed to Auckland) are different thereby allowing different models.

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Auckland Council Waste Assessment Development Preliminary Consultation 3rd September 2010 Ministry for the Environment (MfE) Attendees: MfE - Natasha Tod (NT) (Manager, Business and Communities), Kees Hyink (KH) (Analyst, Business and Communities) Auckland Transition Agency / Auckland Council Jon Roscoe (JR), Parul Sood (PS), Ewen Skinner (ES) (Morrison Low) 1. Overview Overview of process provided key points (also noted in letter dated 9th August 2010): Auckland Transition Agency (ATA) has a statutory requirement to oversee the work on the first Waste Assessment (WA) for the Auckland Council. This is currently being developed with Morrison Low and Associates engaged to facilitate this process on behalf of the ATA. At this stage a round of preliminary consultation is scheduled to be undertaken to inform the development of the WA and Waste Minimisation and Management Plan (WMMP). Statutory consultation will be undertaken when the WA and WMMP is formally notified. This preliminary consultation round is being targeted at key stakeholders who meet a number of agreed criteria. Notes will be taken and will be included within the WA along with any other correspondence to date. Outlined timeframes / process: WA draft prepared over next 2 months. WMMP signed off by June 2012. Key consideration was funding options user pays or rates funding. No definite options at this stage Council not committing to any further consultation beyond what is required by legislation

2. MfE Views MfE gave a general overview of what Central Government was doing. Key discussion points were:

Waste Minimisation Act provides a statutory framework to work under. Every district can make their own decisions taking this legislation into consideration. MfE confirmed that Council has a wide scope in dealing with waste. Local Government has a responsibility for all waste within the councils area, not just what it currently controls. The council need to be proactive in implementing a range of options to deal with this waste. Council could also be looking at other models to achieve objectives i.e. bylaws to license waste collectors as with Christchurch City Council

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Have no stand on funding Funding could be either user pays or rates funded. This is an individual decision but it is noted that the existing levy is less effective if services are funded by rates as there is less transparency. MfE confirmed that diversion of waste from landfill is important. This is clearly stated in the Waste Act where it emphasises reduction of waste to facilities. It is also noted that consistency with the waste hierarchy is very important for council waste management and minimisation planning. The revised NZ Waste Strategy is likely to be completed by the end of year. It is noted that if councils do not do anything to divert waste then there is the ability for MfE to withhold levy funds. MfE is currently investigating what Councils spend the money they receive on. MfE is intending to report back to the Minister on this. Q - What is MfEs view on organics? A The MfE view is that options for minimising organic waste should be assessed alongside minimising other wastes. In Europe there is certainly a focus on diverting organic waste from landfill through the EU Landfill Directive. MfE is aware that some landfill operators argue that depositing organics into landfill is a better option. We do not agree with the view that this is the preferred option for managing organic waste. It was discussed that some landfill operators are mixing up the Emissions Trading Scheme and the Waste Act in promoting their views. Organics potentially has other beneficial uses when removed from landfill i.e. soil enhancement. JR noted that the 2007 State of the Environment Report dealt with the issue of soil conservation and each region makes its own decision. Both this document and the OECD Report give direction and are still relevant. In Europe there is a focus on removal of organics from landfill. Q What Education focus should Auckland Council have? A - The MfE view is that with respect to education council has a key role to play. The focus should be on areas that will achieve the biggest gains in terms of reduction of harm and waste to landfill. Q In Auckland, we are aware that some waste companies are absorbing the levy and not passing it onto its customers. What is MfEs view on this? A - MfE stated they would be disappointed if this was happening as this undermines the purpose of the levy. It was also noted that the Auckland landfill disposal rates are low. This undermines waste minimisation initiatives and one of the purposes of the waste disposal levy is not fulfilled. Q Does MfE believe that the Auckland market is efficient? A No, especially difficult to determine due to information limitations. MfE is aware of inefficiencies within the Auckland market. Ideally these need to be addressed. Q There is a view from some parties that waste in the Auckland market has reduced by 20% already over the past 2 3 years and that Auckland has already achieved its targets. What are MfE views on this? A We have not seen any information to justify this claim . We note that there is a difference between diversion from landfill and a reduction in waste. It should be noted that regardless of whether 20% has been achieved or not, this is not a final target. The Waste Minimisation Act promotes the ongoing effort to reduce waste to landfill. If there was a reduction, there is the possibility that waste could be diverting to other disposal sites rather than a reduction.

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Q What are your views on the recyclables services? Do you have any views on methodology? What is your opinion on the views of some groups that the diversion of recyclables has been maximised? A Again, surprised by the claim that recyclables collection has been maximised as this is at odds with MfEs knowledge. JR noted that survey results (Solid Waste Analysis Protocol or SWAP) show that there is still the ability to increase diversion by potentially a further 20%. With respect to comingled / manual sorting, the MfE view is that there is the ability to increase recyclables diversion and councils should be seeking the most efficient system in which to achieve this. Q What does MfE see as the focus needing to be for the new Council? A The new Council needs to take into account the waste hierarchy. As an example, glass should be ideally reused rather than recycled where possible. The key priority is to minimise waste to landfill. Then to be more efficient in use of materials and focus on greater economic value. MfE see Auckland Council as playing the leading role to achieve waste minimisation objectives. MfE believe that collaboration is key, industry and Council both have roles to play. There is a need to also improve both the collection of and the quality of information; there is a need to be more specific in terms of the information that is to be collected. Private industry needs to play its part in this. Q What are MfEs views on product stewardship? A There are already a range of schemes in place. At this stage, some are accredited and some are not. There are currently a number of additional requests for accreditation. At this stage we are relying on incentives to encourage parties to take the lead and responsibility. MfE sees product stewardship schemes as one tool, although it is noted that there is an issue with voluntary schemes to date having limited scope and ability to achieve objectives. Mandatory product stewardship may be an option into the future.

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Auckland Council Waste Assessment Development Preliminary Consultation 2nd September 2010 Owens Illinois NZ Ltd (OI) Attendees: OI - Wendy Clark (WC) (Sustainable Business Practices Manager), Penny Garland (PG) (Sustainable Business Practices Glass Recovery) Auckland Transition Agency / Auckland Council Jon Roscoe (JR), Parul Sood (PS), Ewen Skinner (ES) (Morrison Low) 1. Overview Overview of process provided key points (also noted in letter dated 9th August 2010): Auckland Transition Agency (ATA) has a statutory requirement to oversee the work on the first Waste Assessment (WA) for the Auckland Council. This is currently being developed with Morrison Low and Associates engaged to facilitate this process on behalf of the ATA. At this stage a round of preliminary consultation is scheduled to be undertaken to inform the development of the WA and Waste Minimisation and Management Plan (WMMP). Statutory consultation will be undertaken when the waste assessment and waste minimization and management plan is formally notified. This preliminary consultation round is being targeted at key stakeholders who meet a number of agreed criteria. Notes will be taken and will be included within the waste assessment along with any other correspondence to date. 2. OI views General OI views: The more glass that can be removed from the waste stream the better. Previously there were issues with capacity at the Penrose OI facility this is not now an issue with the new furnace. The new furnace is to be commissioned next week. This will have the capacity to take an extra 70,000 tonnes of glass out of the waste stream.

Q What do you see as Councils role with glass? While glass needs to be removed from the waste stream, there are a number of other groups with responsibility as well i.e. stewardship schemes, manufacturing industry, Glass Packaging Forum. A OIs view is that the OI approach provides the best use of glass there are significant carbon benefits with substitution for virgin material. We believe that it is ratepayers expectation that a glass bottle be remanufactured back into a glass bottle and that Council has a role in facilitating this. Q - Two key questions. Who pays, and who promotes the benefits vs. lower convenience to the ratepayer? Who pays for it if there is an additional cost? A - Discussion around this issue. It was agreed that ratepayers want reduced costs. It was noted that Council at present is meeting its obligations under the Waste Act and that preliminary estimates are that the costs for a separate glass collection would be $115 per tonne (an additional $40 per tonne over and above the $75 per tonne that OI currently pay) If there was a separate glass collection, who would financially benefit? Would there be savings in costs to businesses, such as exporters of wine, etc? It was noted that Villa Maria have carbon quotas and that there would be additional benefits from the 1

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use of glass bottles that have been recycled. There will be additional cost associated with the additional service but who pays? The argument is that it should not be the ratepayer but the business that benefits. More transparency in costs is an issue. OI is in agreement with the points discussed above. The OI view is that it comes back to product stewardship, those that produce / benefit should be contributing. The ratepayers should not shoulder all the costs. All those that benefit should contribute including OI, Visy and users. Q There are also issues of convenience. Currently glass is in one bin with other materials. If a separate bin was provided, this would be less convenient. What are OIs views? A While we acknowledge that two bins would be less convenient for the householder, having to separate glass into separate bins and place two bins out on different days, we do not believe that this will be a significant issue to the ratepayer. Q If there is to be any change in service, who promotes this to the ratepayer? A OIs view is that it has to be a collaborative approach Council, Visy, OI, Packaging Council etc. There should also be a transparency of costs. When Manukau City Council and Auckland City Council were looking at a new recycling scheme they did not make the correct decision on methodology. Within Visy the key people in Australia are Tony Kaye and Lee Smith. OI have been dealing with them. Discussions have shown that Australia is not a good example of glass recycling. Sydney only diverts 50,000 tonnes of glass (c.f. NZ 120,000 tonnes) At this stage only 60% of glass is 8mm and above. Visy is seeking funding from OI to extract smaller glass (below 8mm) OI to confirm methodology Q - Would OI fund glass collections / do it themselves? It is noted that a separate glass collection service is expensive - Confirmed that currently annually pay $75/T would possibly be $115/T therefore a $40/T+ shortfall A - OI would give this further consideration. Q - Would OI run bottle banks? A We have done previously, but have found that these are subject to abuse and have significant costs. Q What are OIs views on the Container Deposit Legislation? It is noted that if the product has value, it will reduce costs for the existing collection services and have other positive spin offs such as reduced illegal dumping / litter. A OIs view is that this is very expensive. The customer base does not like it and d costs of administration are high. We believe that a lot can be achieved from voluntary schemes and a self levy. Our view is that it does not work effectively in Australia. OI agreed that they would think about the two key questions and respond back by Friday 10th September.

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Auckland Council Waste Assessment Development Preliminary Consultation 2nd September 2010 Packaging Council of NZ Attendees: Packaging Council of NZ Sharon Jereb (SJ) (Environmental Manager) Auckland Transition Agency / Auckland Council Jon Roscoe (JR), Parul Sood (PS), Ewen Skinner (ES) (Morrison Low) 1. Overview Overview of process provided key points (also noted in letter dated 9th August 2010): Auckland Transition Agency (ATA) has a statutory requirement to oversee the work on the first Waste Assessment (WA) for the Auckland Council. This is currently being developed with Morrison Low and Associates engaged to facilitate this process on behalf of the ATA. At this stage a round of preliminary consultation is scheduled to be undertaken to inform the development of the WA and Waste Minimisation and Management Plan (WMMP). Statutory consultation will be undertaken when the WA and WMMP is formally notified. This preliminary consultation round is being targeted at key stakeholders who meet a number of agreed criteria. Notes will be taken and will be included within the WA along with any other correspondence to date. 2. Packaging Council of NZ views

General Views:

We believe that there should be consistency with regard to services across the Auckland region. An organics collection is critical if reduction in waste to landfill is to be realised. A 3 bin system is required. The quality of recyclable materials is an issue. There are currently paper and glass contamination issues, Q If quality is an issue, how can this be resolved? A There is a need to keep glass separated out via a separate collection. Q If costs are higher for a separate glass collection, who should pay? A It is noted that Owens Illinois NZ Ltd (OI) have just built a new furnace and as a consequence needs to secure more glass for production. The Packaging Councils view is that, in terms of contributing to the costs, all options should be reviewed. If there are additional costs, then all options should equally be explored to work out who should share in these. Q The two key questions for Council are who pays and who promotes the benefits vs lower convenience to the ratepayer? What is the Packaging Councils views on this? A We agree that these issues need to be addressed. SJ is to review these and respond within next 1-2 weeks. However it is noted that the quality of glass and other recyclables is a big issue (ignoring costs). The Packaging Councils vision towards sustainable packaging encapsulates the quality aspect of recovered packaging material since improved quality (ie less contamination) improves the end of life options for all packaging materials. 1

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Ideally, the Packaging Council would like to see a move to increased separation of materials, particularly plastic resin types. It is noted that Plastics 1 & 2 are already separated, with resins 3-7 being grouped together as mixed plastic. We would like to see investigated the cost/benefit of further separation for example Polypropylene, being the next biggest resin used in food packaging. We are aware that a lot of material is exported overseas. We would want to minimise this through improving the quality. The preference is for the NZ market to grow i.e. build capacity. Our view is that this has to stack up economically, otherwise it will be unsustainable. Q What are your views on product stewardship? A - There needs to be a shared responsibility along the supply chain from manufacturers to consumers. As well as this, there is a need to focus on manufacturing and moving up the supply chain to focus on waste at the start of the pipe i.e. design optimisation to reduce wasted packaging materials. Do not try to address waste reduction at the bottom end of the pipe; you need to look at collaborating across the supply chain. Q What are your views on user pays? And do you believe that this changes behaviour? A - . Note that the Packaging Council has no formal position on user pays. Q What are your views on the Container Deposit Legislation (CDL)? A We do not support CDL. Our view is that this is an expensive way of catching a small part of the waste stream. Q - What is the Packaging Councils influence over the Auckland market? Noting that there are large quantities of material being imported into Auckland and NZ which currently there is little or no control over? A It is acknowledged that the Packaging Council has limited influence; however, we are still focussed on doing what we can. It is noted that NZ is a packaging taker. Q What is your position on a scheme which encourages returning your waste to the store that sold it to you? A We would not support any campaign regarding returning your waste to a store. Views are that it would have a number of complications with health and safety, logistics and costs it is not an efficient approach. Q Are the current systems that are in place reducing waste? A It is too early to tell. The focus is on waste minimisation but this is not well understood by the public. Our view is that the Waste Management and Minimisation Act is not widely known. There is a lack of coverage due to complacency. Auckland Council should focus on waste minimisation, the intent of product stewardship and choice with regard to waste minimisation. With regard to the levy, the Packaging Council did not originally support it, however we maintain our publicly stated position that the monies should being spent on bigger infrastructure projects, or national projects. We are not in support of piecemeal spending. . Q - What is the manufacturers contribution? A - Global brands already produce goods as efficiently and effectively as possible. Councils provide services and the ratepayers pay for these. Auckland Council needs to provide support by raising the profile of the Waste Management and Minimisation Act

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and the obligations contained within the legislation. It is noted that in our submission to the Select Committee, we wanted to see cohesion across the region.

Actions To send out notes and where appropriate Packaging Council to expand upon key issues within next two weeks.

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Auckland Council Waste Assessment Development Preliminary Consultation 2nd September 2010 TransPacific Industries Limited (TPI) Attendees: TPI - Tom Nickels (TN) (Managing Director) and Ian Kennedy (IK) (GM Shared Services) Auckland Transition Agency / Auckland Council Jon Roscoe (JR), Parul Sood (PS), Ewen Skinner (ES) (Morrison Low) 1. Overview Overview of process provided key points (also noted in letter dated 9th August 2010): Auckland Transition Agency (ATA) has a statutory requirement to oversee the work on the first Waste Assessment (WA) for the Auckland Council. This is currently being developed with Morrison Low and Associates engaged to facilitate this process on behalf of the ATA. At this stage a round of preliminary consultation is scheduled to be undertaken to inform the development of the WA and Waste Minimisation and Management Plan (WMMP). Statutory consultation will be undertaken when the WA and WMMP is formally notified. This preliminary consultation round is being targeted at key stakeholders who meet a number of agreed criteria. Notes will be taken and will be included within the waste assessment along with any other correspondence to date Outlined timeframes / process: WA draft prepared over next 2 months. WMMP signed off by June 2012. Key consideration was funding options user pays or rates funding. No definite options at this stage Council not committing to any further consultation beyond what is statutory required 2. TPI Views TM gave overview of TPI views:

TPI favour Mobile Garbage Bins (MGB) waste collection services as opposed to bag collections. Primarily due to health and safety issues. Board decision has been made that TPI will not be tendering for contracts that have runners. It is noted that for refuse this is definitive. For recycling, TPI could still be interested in a crate based service but it is not their preference. TPI favour separate glass recycling, but not a kerbside sort using a truck and trailer. A Low Entry Vehicle methodology would be satisfactory TPI view is that the levy has not made a great impact on reducing waste.

Q What is TPIs view on the need to focus on reducing waste to landfill? What is Councils role in reducing waste to landfill (should Council be responsible for the total waste stream or only that which it controls)? A - TPI view is that the concept of reducing environmental harm is the objective and measure to use. Also resource efficiency, i.e. better use of resources should be a focus. TPI disagree with the intent of the Waste Act and is uncertain as to what Waste Minimisation actually means. Reducing waste to landfill once produced is not relevant and they do not believe that this is a good indicator. There should be a focus upon 1

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reducing waste at the producer end. Once waste is produced then there should not be focus upon directing materials away from landfill. Landfilling is the most efficient and effective way to deal with waste. Council should only be dealing with the waste that it controls. Q Noted that waste can be a resource and there is an argument that if we can get beneficial use then we should focus upon this. Composting is an example where nutrients and carbon can be released back into the soils. What are TPIs views on composting? A - If Council is looking at composting or in-vessel technology then TPI would be interested in being involved. Our overall view however is that the best use of organics is through landfilling. In this way, materials can be utilised to generate gas and electricity. The energy potential of the waste stream is significant. This has better overall outcomes than focussing upon waste minimisation and diversion from landfill. IK stated that there is a need to consider sustainability. If you separate out organics then you need to be confident on the costs and markets etc. TPIs view is that a composting operation is not sustainable. Q What are TPIs views on who should be providing services to the market? What level of control should council have? A With respect to collection contracts the most efficient way is to provide services via either the private market or on a contractual basis with Council. Council should limit their direct involvement. For collections, the private sector is best placed to deliver these services, there is already competition encouraging this market efficiency. You could divide Auckland into regions, not 21 local board areas, but potentially into 4 or 5. Tenders would be for 7 year periods. This would maintain competition and provide the best outcome for Council with the lowest cost. Q There is the opportunity to look at a licensing option where for a specified geographic area; Council would grant an exclusive right to collect refuse and other waste related services. Under this scenario, landfill waste belongs to Council and there would be requirements for the contractor to meet waste diversion targets which they could achieve via a variety of means. What are TPI views? A This option is new to TPI. TN stated that consideration would need to be given to this before responding. IKs view is that a licensing model as described above has a high level of council control. It is believed that a licensing model similar to what Rodney District Council (RDC) has in place is a better option. JR commented that it is unlikely that the RDC model meets obligations to ensure waste services are provided. Q Council has control of less than 20% of waste stream. What is Councils responsibility with regard to the waste stream and how can it increase its ability to reduce waste? A TPIs view is that the waste stream has already been reduced by 20%. Private collectors are doing their part. TPI recycling tonnages have increased significantly over the last few years. There is no need for Council to recycle more as the existing councils have already maximised what can be achieved through kerbside recycling. Council should have no role in terms of commercial waste. Q The PriceWaterhouseCoopers report for ATA identified Council control/involvement as being critical. An option identified was increased council control via involvement with RTS / landfills. Does TPI see merits in this approach? It is noted that a resource recovery network has been suggested previously but has been difficult to implement as the existing infrastructure is not owned by Council to support this. A There is no need for Council input. Initiatives like Greenstar are already in place driving waste minimisation already. If this option were to be pursued, TPI would favour 2

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options where Public Private Partnership type options were involved. This is for both existing as well as new infrastructure. TPI see Councils as potentially an equity partner and note that this could be with one or more private parties. An issue may be equity in infrastructure outside the region. Q What does TPI see as Whitford Landfills and Waste Disposal Services role in the new Auckland Council? A TPI believe that using the Whitford landfill will provide benefits. It is TPIs view that potentially $800,000 per annum can be returned to Council through this. Further general discussion arose surrounding this point with disagreement over the size or any benefits to Council. It was noted that the Whitford Landfill gates rates were considerably higher than for other landfills and as Council had a commitment to provide over 80,000 Tonnes per annum the costs to the Council and ratepayers were very high. While Council does receive a share of the profits these are dependent upon the costs associated with Waste Disposal Services costs. It was agreed that TPI are to provide a more detailed proposal to Council to quantify any benefits.

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Auckland Council Waste Assessment Development Preliminary Consultation 2nd September 2010 Visy Attendees: Visy Paul Thorn (PT) (General Manager NZ Recycling) Auckland Transition Agency / Auckland Council Jon Roscoe (JR), Parul Sood (PS), Ewen Skinner (ES) (Morrison Low) 1. Overview Overview of process provided key points (also noted in letter dated 9th August 2010): Auckland Transition Agency (ATA) has a statutory requirement to oversee the work on the first Waste Assessment (WA) for the Auckland Council. This is currently being developed with Morrison Low and Associates engaged to facilitate this process on behalf of the ATA. At this stage a round of preliminary consultation is scheduled to be undertaken to inform the development of the WA and Waste Minimisation and Management Plan (WMMP). Statutory consultation will be undertaken when the WA and WMMP is formally notified. This preliminary consultation round is being targeted at key stakeholders who meet a number of agreed criteria. Notes will be taken and will be included within the waste assessment along with any other correspondence to date. Outlined timeframes / process: WA draft prepared over next 2 months. WMMP signed off by June 2012. Key consideration was funding options user pays or rates funding. No definite options at this stage. Council not committing to any further consultation beyond what is statutory required. 2. Visy Views Paul Thorn provided an overview he has been in his current position for 5 months. He reports to Tony Kayne who is the GM Recycling Australasia.

Q - Historically there have been issues with glass (the Visy mountain) and the capacity of the Onehunga Materials Recycling Facility (MRF). Our understanding is that with respect to glass there were issues with both the quality and quantity of glass. Comingling of glass has been raised as an issue by others, and there has been discussion around options for potential separation of glass i.e. colour sort at kerb. What are Visys comments and views? A - It is agreed that there have been issues with the facility, the plant was not set up properly to manage the mix of recyclables and in particular, the glass had created problems. The contamination of paper from glass fines has been an issue with the local paper manufacturer. It is noted, however, that overseas the paper facilities are more modern and this is not an issue there. With respect to having a separate glass collection Visy can cope with both materials from either a commingled or separate glass collection service. PT agreed that collection costs would increase if there was a separate collection service and that there would be benefits to Visy, Owens Illinois NZ Ltd (OI) and others e.g. users such as Villa Maria, as

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a result of the separate collection service. His view is that for the householder, the key issue will be convenience so there needs to be a simple methodology. A move to automation is a given moving into the future. Based upon Australian experience there is a need to limit the number of bins on the kerbside.

Q There has been feedback from others in the waste industry that glass quantity levels had dropped since the new commingled service was introduced is this your view? A No. There have been issues with glass quality and the ability to cope with quantities at the facility but these are now largely resolved. The new beneficiation plant is now operational (this was commissioned on 14th May 2010) and Visy have now started experimenting with the existing glass stockpile. It is noted that there have been additional quality issues relating to worm infestation and degradation of labels resulting in additional contamination. The glass is being washed in an attempt to resolve these issues). PT confirmed that the MRF can deal with all new glass and concurrent to this will take 7 9 months to recover the stockpile. Glass to OI was 5,500 6,000 tonnes last month. 25% of this was from Manukau City Council / Auckland City Council contracts (1,500 tonnes) and the rest was merchant glass. It should be noted that OI is not the only outlet for glass there are other options. Yield loss is currently 15-18% made up of shard glass etc. This is used elsewhere for aggregates and high end industrial uses. This shard glass is not landfilled. At this stage Visy have only needed to landfill Ceramic Stone Porcelain (CSP) and pyro glasses. It is noted that there have also been issues with flint identification. The plant requires Xray technology to deal with these problem areas. Visy have asked OI if they could contribute and are still awaiting a response. In summary, Visy can potentially improve recovery rates but this will be a commercial decision as it requires further capital investment. Q It is noted that there are currently conflicting views on glass quantities and quality between respondents. Can you comment / clarify? A PT to arrange for Visy and OI to meet and come back to Council on whether there is an issue with respect to glass, and what is an acceptable level of glass material.

Q Is the Visy facility able to cope with all of Auckland regions recyclables? A Yes. PT confirmed that the facility can cope with the entire Auckland market for all kerbside recyclables from 1 November 2010. It is noted that there is also scope to grow the commercial recyclables market. Q What is your view on Container Deposit Legislation (CDL)? A No definite view. It is noted that it works well in South Australia. Q Education. What is Visys view on what Council should be focussing upon? A Need to focus upon education around contamination. Visy like the 3 card system for dealing with contamination in Manukau. Also note that Herne Bay has the best quality recyclable materials. It would be helpful if any processes that work get rolled out to other Council areas.

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Auckland Council Waste Assessment Development Preliminary Consultation 3rd September 2010 Waste Advisory Board (WAB) members

Attendees: WAB members - Rob Fenwick (RF) / Lesley Stone (LS) as Individuals not WAB ATA / Auckland Council Jon Roscoe (JR), Parul Sood (PS), Ewen Skinner (ES) (Morrison Low) 1. Overview Overview of process provided key points (also noted in letter dated 9th August 2010): Auckland Transition Agency (ATA) has a statutory requirement to oversee the work on the first Waste Assessment (WA) for the Auckland Council. This is currently being developed with Morrison Low and Associates engaged to facilitate this process on behalf of the ATA. At this stage a round of preliminary consultation is scheduled to be undertaken to inform the development of the WA and Waste Minimisation and Management Plan (WMMP). Statutory consultation will be undertaken when the WA and WMMP is formally notified. This preliminary consultation round is being targeted at key stakeholders who meet a number of agreed criteria. Notes will be taken and will be included within the waste assessment along with any other correspondence to date. It is noted that RF and LS are not representing the Waste Advisory Board. They were representing themselves as waste experts with a full appreciation of the issues facing the Auckland Council and New Zealand.

2.

WAB Individuals Views LS Provided overview. Noted that she works for the University of Auckland as the Sustainability and Environmental Coordinator. The University of Auckland is a significant user of waste services and diverter of waste. LS works in the waste management / environment service areas and has previously worked with industry, central and local government focussing on cleaner production, waste reduction and sustainability related areas. LS reports directly to the Vice Chancellor and Head of Property. LS would ideally want the ability as a large generator of waste (University) to work with Council to reduce waste to landfill. RF Provided overview. He is a Director of Living Earth. RF noted that the WAB has looked closely at the Auckland Council and recognised the impact Auckland has / will have on the national scene. It accounts for 1/3 of NZs population and waste stream. WAB has a national mandate but Auckland City is too big an issue to ignore. WAB role is to advise the Minister of Environment on waste minimisation and provide advice to the Minister. The Minister is not compelled to take or act on the advice given to him. JR and ES noted that ideally for the development of the WA and WMMP, that the full round of correspondence between the WAB and Minister would be useful. ES is to follow up to obtain this information.

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RF noted that a year ago, WAB wrote to the Minister identifying that one million tonnes of waste is generated in Auckland region and the Auckland Council will be key to reducing waste in NZ and effect its ability to achieve targets. It is noted that there were serious impediments in achieving the objectives to reduce waste to landfill e.g. Two landfill owners that set artificially low disposal rates (landfill gate rates are in order of $60 per tonne (or less) in Auckland while in Christchurch the gate rates are 2 3 times higher which better reflects the true costs). These low landfill rates in Auckland have significant impact upon waste minimisation and recovery activities which cannot compete. There are also serious inefficiencies within the current Refuse Transfer Station (RTS) network which need to be addressed. RF confirmed that the WAB had recommended legislation (2nd and 3rd bill) to provide the machinery to create Public Private Partnership type of arrangements. The Minister had replied confirming the opportunity. He had noted WAB concerns but indicated that the long term solution may be complicated with a need to balance environmental concerns with market competition. This resulted in some further communication and the Select Committee outcomes. Q Council is interested to hear RFs views on the current Auckland Market. In the consultation to date there have been views expressed by another industry player that there are no inefficiencies in the Auckland market and that waste has already reduced to landfill by 20%. What are your views on this? A RF responded Believes that there are inefficiencies in the Auckland market and that we are not meeting obligations to reduce waste to landfill. It is noted that Redvale Landfill is at a very profitable stage of its life and that shareholders were likely to be trying to maximise tonnage and profits. Their intent is to increase tonnages to landfill which is plainly at odds with NZ legislation and Auckland waste plan objectives. Q What is your view on what the Waste Act requires Auckland Council to do? A RF response - View is that the Waste Act requires waste reduction to landfill. Council has a key role and is responsible in helping achieve this. It is required to take a lead role. Q - If Council does not take a role then who will? A RF response Agreed that the intent of the Act cannot be fulfilled without Council involvement to a high degree. LS response The key issue for Auckland is the lack of integration. There is an opportunity with the new Auckland Council to provide this. It is noted that research undertaken for the Ministry for the Environment (MfE) (2002/03) by the University of Auckland looked at a range of waste minimisation initiatives including local government / community initiatives. The issue that became apparent was that often local government/communities were trying to implement things in an ad hoc basis. Activities and initiatives were being undertaken in isolation, sometimes with Council providing seed funding. There is a focus on revenue generating activities needing to be sustainable. There is an issue of support organisations needed to be helped. This was not happening so as a consequence most initiatives struggled (and potentially failed). Action: LS is to supply document.

RF and LS - The Waste Act implies that local government has the responsibility for delivering waste minimisation for all waste within its boundaries. It was noted that the Act is only one tool, it needs to be used with a suite of other tools including voluntary

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initiatives, education and economic incentives. The WMMP needs to identify this suite of options.

Q What are your views on voluntary accords as opposed to mandatory? There are differing views on their effectiveness, as they often only cover part of a sector and there is potential for key players to be let of the hook. An example is the glass packaging forum where the imported glass sector is not captured and in fact do not even know what the quantities of imported glass are. A - RF response Regulation is needed to address these issues properly. Consumer behaviour in NZ is price driven and cannot protect participants in a voluntary programme. As a consequence there is the potential for the process to be undermined, as with tyres and glass. A mandatory approach would work better. Q What are your views on Container Deposit Legislation (CDL)? A RF The Board does not have a view on this. It is noted that the WA and WMMP needs to address this issue and state a position. It is also noted that WAB have to complete a review on the waste levy by July 2011 and it is important for Auckland Council to form a view on this. There has been some correspondence with the Minister already on this. Action: ES to follow up to obtain copies of this info. RF further commented upon the NZ Waste Strategy. His understanding is that it will be targeted to reducing waste that causes harm including environmental harm having a focus on environmental harm as a priority. Q During this consultation round we have met with glass collectors / processors and discussed issues around glass quality, collection methodologies, costs and economic benefits. There is an option to get an improved quality of product however this costs more. Who should pay? At this stage Visy and OI have indicated that they will be getting together to discuss this. Auckland Council needs to form a position. What are your views? A - LS response In favour of a user pays approach and transparency. Those that benefit / use services should pay. LS discussed weighing wheelie bins with regards to refuse services and noted that the University of Auckland contractor has agreed to implement this methodology. The view is that there is a lack of transparency in Council charging via rates.