file i - australian competition & consumer commission...isabelle arnaud director, adjudication...

FILE No: I DOC: . .

MARSIPRISM:

1 Contact: Jenny Moore Telephone: 07 4927 01 11 Facsimile: 07 4927 0166 Email: Jennv.Mwre@dlerxr, ald. eov. au

16 April 2008

Isabelle Arnaud Director, Adjudication Australian Competition and Consumer Commission PO Box 1 1 99 DICKSON ACT 2602

Dear Isabelle

APPLICATION FOR AUTHORISATION - PROPOSED REGIONAL WASTE AND RECYCLABLES COLLECTION AND PROCESSING CONTRACT (CENTRAL QUEENSLAND LOCAL GOVERNMENT ASSOCIATION)

Please find attached an application from the Central Queensland Local Government Association (CQLGA) on behalf of the Rockhampton, Gladstone, Central Highlands, and Isaac Regional Councils, for Authorisation under the provisions of Section 88 of the Trade Practices Act 1974 to proceed to Tender for the procurement of the Region's waste and recyclables collection and processing services.

The application includes:

Form B of the Application; Map 1 of the Central Queensland region; Attachment 1 - consent tetters from the 4 participating councils; Attachment 2 - Section 4 Public Benefit Claims of Form B; and, Attachment 3 - Section 5 Market Definition of Form B.

The CQLGA is seeking Interim Authorisation to go to tender as well as a Final Authorisation from the ACCC.

An Electronic Funds Transfer (EFT) of the application fee of $7,500 has been processed to the ACCC Official Administered Account (Lodgement Reference - CQLGA). This application has been lodged electronically on 16 April 2008 and a hard copy of this covering letter and 3 copies of the full application will be forwarded to the ACCC on Thursday 17 April 2008.

If you require any further information please contact the CQLGA.

/ Yours sincerely

Jenny Moore Executive Officer

POSTAL: PO Box 1624 ROCKHAMPTON 4700

President: Cr Rick Bichsel Executive Officer: Jenny Moore Ph: (07) 4973 7280 Ph: (07) 4927 0111 Fax: (07) 4973 7622 Fax: (07) 4927 0166 Email: Email:

Le 2, 130 Victoria Parade, 1' ' Rockhampton 4700

vel :

2 C:\Documents and Settings\moomj\Local Settings\Temporary Internet Flles\OLKlZC\Let ACCC CQLGA Application 16 04 08.Uoc of

Form B Commonwealth of Australia

Trade Practices Act 1974 -subsection 88 (1)

AGREEMENTS AFFECTING COMPETITION: APPLICATION FOR AUTHORISATION

To the Australian Competition and Consumer Commission:

Application is hereby made under subsection 88 (1) of the Trade Practices Act 1974 for an authorisation under that subsection:

to make a contact or arrangement, or arrive at an understanding a provision of which would have the purpose, or would have or might have the effect, of substantially lessening competition within the meaning of section 45 of that Act.

• to give effect to a provision of a contract, arrangement or understanding which provision has the purpose, or has or may have the effect, of substantially lessening competition within the meaning of section 45 of that Act.

1. Applicant

(a) Name of Applicant:

Central Qu-land Local Government Association (CQLGA): \ o 31 Rockhmpton Regional C o d Gladstone Regional Council Central Highlands Regional Council barreRe@nalC!vuncil

(b) Short chaiption of'bwiness carried on by applicant:

The ecruncil appH.c;mts are dl local government authorities under the Qumnslpmd bml GoYenuPre;ntAct 1993.

Historidly L u d Government has been responsible for waste collection and disposal in'the community. Homer, due to a number of drivers far change,

of badfill €he l3mpmdWtia of Loall 8 0 m e n t @fiamtlp gv&r the past dead@.

The legislative requirements tbr how Councils mamp waste are governed by the provisions of the Queemland Environmental PmWon.Act 1994, & m e n d Prokctian (Waste Edam-) Regulation 2000 d the Enviromena Pratedim &tmh Waste Management) Regulation 1896.

Among other thingsD Councils are rapired to develop a Waste Management Strategy for the locd government area a d have powers to re@* waste vehicle movements, unlawibl &sposd ofwas* and litter problems within the area.

CQLGA A~dwrisation Application to the ACCC April 2008 Page I of10

(c) Address in Australia for service of documents on the applicant:

cl- Central Queensland Local Government Association PO Box 1624 ROCKHAMPTON QLD 4700

2. Contract, arrangement or understanding

(a) Description of the contract, arrangement or understanding, whether proposed or actual, for which authorisation is sought:

The Central Queensland Local Government Association (CQLGA) invites tenders on behalf of the Regional Councils of Rockhampton, Gladstone, Central Highlands and Isaac for the supply of:

(a) Waste and Recyclables Collection Services (b) Recyclables Processing Services (c) Bulk Waste Services (d) Landfill Services; and (e) Liquid Waste Services

(b) Description of those provisions of the contract, arrangement or understanding that are, or would or might, substantially lessen competition:

There are 5 specifications to the contract with separable portions for each specification for the participating councils as outlined below in Table 1.

Tenders may submit Tenders for one or more of the separable portions and the successful tendererltenderers will be required to enter into separate contracts with each council.

The Waste and Recyclables Collection Services (Specification A) is for the Central Highlands and Isaac Regional Councils only. For several years the former councils that now make up these two new regional councils have been working together to align their waste collection contracts to create a larger combined catchment area and make the new tender more attractive for waste contractors to tender for. In order to get the desired alignment, several of the former councils extended their contracts on a month by month basis and are continuing to do so.

While planning the development of a joint waste collection contract, the councils decided to investigate the inclusion of a kerbside recyclables collection. The Central Highlands and Isaac Regional Councils are located in the Bowen Basin coalfields and rapid expansion in the coal mining industry is occurring in the region.

An i n k of people fkom other regions of Australia where kerbside recycling is a standard council service has created an expectation that a kerbside recyclables collection service should be available in these two councils. Previously, this service was deemed to be uneconomical for ratepayers due to the small catchment area (tonnages) and the distance from the major coastal urban communities (transport costs) of the region.

CQLGA Authorisation Application to the ACCC April 2008 Page 2 of 10

Consequently, as part of the pre planning phase of the tender, the two councils contracted Local Govemment I n f i a s t r u ~ e Services (LGIS) to do a transport feasibility study for kerbside recycling..

This study indicated that a kerbside recyclables collection service was feasible due to the increased tonnages associated with the amalgamation of the former councils. The councils then'agreed to include the collection of recyclables into the tender.

The Gladstone and Rockhampton Regional Councils are not included in Specification A. Gladstone Regional Council's waste and recyclables contract is not due fbr renewal and Rockhaupton Regional Council provides an 'in house' service utilising day labour for waste and recyclables collection.

The Recyclables Processing Services (Specification B) was originally a separate tender to be developed for the new Gladstone and Rockhampton Regional Councils only. However with the inclusion of a recyclables collection service for the Central Highlands a3ad Isaac Regional Councils, it was agreed by all four councils that a combined tender be developed for the Recyclables Processing Services (Specification B) and that separable portions be identified.

This was determined on the basis of an Expression of Interest (EOI) that was facilitated by the CQLGA for a Materials Recovery Facility (build, own, and operate) in December 2006, prior to the development of the tender. A clear indicator fkom the EOI process was that at least 8,000 tonnes of recyclables per year was required before any viable processing facility could be developed in the region. Neither Rockhampton nor the Gladstone Regional Councils could achieve this minimum requirement on their own, however a regional approach involvihg a l l 4 councils would not only reach the minimum tonnage but it would actually reduce the cost of processing as the combined amounts would exceed the minimum tonnage needed.

Specifications C, D, and E are fbr ancillary waste services and are only applicable to the specified councils as indicated in Table 1.

Table 1


SPECIFICATION

Waste snd Recyclablear Collection Services (Specification A)

Recyclables Processing Services (Specification B)

Bulk Waste Services (Specification C )

Landfill Services (Specification D)

Liquid Waste Services (Specification E)

SEPARABLE PORTION Central Highlands ONLY Isaac ONLY Central Highlands AND Isaac

Rockhmpton AND Gladstone ONLY Central Highlands AND Isaac ONLY Rockhaupton AND Gladstone AND Central Highlands AND Isaac Isaac ONLY

Central Highlands (Blackwater) ONLY

Central Highlands ONLY Isaac ONLY Central Highlands AND Isaac

(c) Dewription ofthe Gods or.s&ces b wEch the contract, arrangement or understanding (whether proposed or actual) relate:

3 4 V F " L Y l

A summary of each specification is provided as follows: . , " , '

ecification A $Wsstg and Re &I =.do 1 l,'.?&l*" ," ,rr. !..yv) , . . , 1 ---a -%

This specification involves the collection of waste and recyclsibles from properties within the major townships of the Central Highlands and Isaac

-*Q; Regional Councils and tramporting the waste to existing landfills at Emerald (Lochlees), Moranbah, Glenden, Capella, Tieri and Dysart.

The Councils have recently been through the process of local government amalgamations and may consider the consolidation of landfill operations. Over

@ the longer term, the closure of landfills is possible. Whilst the specification nominates the deposit of waste at the existing facilities, rates are also sought

- f fiom Tenderers to transport waste directly to the Emerald and Moranbah facilities alone) M - W M M R W e 'I%illBiFi&rJP adP ! ic; D-#W

' - & n ILFWJQ lrtf,pIpC.pU i > h ~ v f I P 1 . e-m~&.rrUF J , 3!&kT

~f~:includd are Services such as: ~ : j ~ ; t ~ h j ~ & .

2&$0&. (10 131 1 ; bfd?' . Waste Services; &# 707 .c&&:.) &fi b&,.s Kerbside Clean-up Service Infirm Services; *:,dzaa*a s*.

nu! z b q l e d Mi e?u ti8~tJi&itT! . Multi-Residential Services; . - dniv <*%I djsd hq3hJp5 - aq Special Event Services; an& nrmT\ - u ' . - ~ e ; ~ v nA* q.' Dead Animal Services.

'-""'t!$%&f will be using a ' ' d d $46'~it9k~&atid 240 w k&~&l&es -. container system as opposed to a "split" amtaher system and will require the

assembly and delivery of new bins throughout the Central Highlands and Isaac Regions. Containers for the initial roll out of the new service will be supplied by Council. New containers throughout the term of the contract will be supplied by councils, although the Contractor will supply containers which have been lost, stolen or damaged.

- - :, , ..y3GzT&. i es no mc u e nor does it seek expressions relating to al methods or sites. It has been drafted to exclude thee types

of services to allow the contractor to focus on waste trarupo*.~, =,A:; .#

Specification B (Recyclables ProcesJog +ervice&,, ,> .., .wM I

. Cr . a *&: hed.%. ha\

This specification involves receiving Recyclables from the Rockhampton, Gladstone, Central Highlands and Isaac Regional Councils fiom a single nominated disposal location within each region. The nominated disposal facilities are to be located within 15km of the GPO of Rockharnpton, Emerald and Clermont, with further facilities at the Gladstone Waste Transfer Facility. Each facility may process recyclables, or simply receive the material for transport to a Materials Recovery Facility. ,.* .

, - 8 1 1

The Contractor is then responsible for sorting, processing, storage and sale of material, and the disposal of contaminants.

-.- - -"-a7 V. r - - =

CQLGA Authorisation Application to the ACCC April 2008 Page 4of 10

Specification C (Bulk Waste Haulage Services)

This specification includes collecting waste stored at Council's Waste Transfer Facilities and transporting that waste to the Council's existing landfills at Emerald (Lochlees), Moranbah, Glenden, Capella, Tieri and Dysart.

Over the longer term, as in specification A above, the closure of landfills is possible, which may result in the development of additional Waste Transfer Facilities throughout the Regions. Whilst the specification nominates the deposit of Waste at the existing facilities, the CQLGA is seeking rates fiom tenderen to provide prices for the transport of waste directly to the Emerald and Moranbah facilities.

Specification D (Landfi Operational Services) . .-. This specification involves managing the Blackwater Landfill in the Central Highlands Regional Council. The contractor will be responsible for effectively and efficiently separating and compacting waste received at the landfill and managing the environmental impacts of the facility and its procedures.

The contractor will also be responsible for charging and collecting an appropriate gate fee for disposal of waste at the facility, which will be passed on to council. Council will supply cover material where it cannot be won on site, and the council will provide directions to the contractor indicating how it requires operations to be conducted on site.

Specification E (Liquid Waste Services)

This specification involves collecting, transporting and disposing liquid waste h m commercial and domestic premises, within the whole of the Central Highlands Region. The contractor will provide an on call service for collecting waste found in grease traps, holding tanks, oily water traps and septic tanks.

The contractor will then be responsible for transporting the liquid waste to council's nominated disposal locations at Capella, Emerald and Blackwater (or in the case of Grease Trap Waste and Oily Water Waste, to another appropriate site identified by the contractor and approved by council) for disposal.

(d) The term for which authorisation of the contract, arrangement or understanding (whether proposed or actual) is being sought and grounds supporting this period of authorisation:

A 10 year period of authorisation has been sought fiom the ACCC by the participating councils, in line with the terms of the intended contract.

This 10 year period will allow councils to effectively engage with their communities to develop a waste management approach that will deliver ecologically sustainable outcomes over a longer timeframe.

The duration of this tender for which authorisation is sought is for ten (1 0) years and is not likely to restrict competition as seven to ten (7- 10) years is the accepted timefiame within the waste industry for a successfbl tenderer to amortise the plant and infrastructure expenses required to undertake the contract.

CQLGA Authorisation Application to the ACCC April 2008 Page 5 of I0

The re- tendering of the contract prior to the end of the ten (10) year term will allow competitors in the market to present fiuther competitive bids.

Parties to the proposed arrangement

(a) Names, addresses and descriptions of business carried on by other parties or proposed parties to the contract or proposed contract, arrangement or understanding:

None

(b) Names, addresses and descriptions of business carried on by parties and other persons on whose behalf this application is made: (Refer to direction 5)

Rockhampton Regional Council PO Box 1860' ROCKHAMPTON QLD 4700

Gladstone Regional Council PO Box 29 GLADSTONE QLD 4680

Central Highlands Regional Council PO Box 21 EMERALD QLD 4720

Isaac Regional Council PO Box 97 MORANBAH QLD 4744

Attachment 1 includes the consent letters fiom each of the above named councils

4. Public benefit claims

(a) Arguments in support of authorisation:

Refer to Attachment 2

(b) Facts and evidence relied upon in support of these claims


5. Market defdtion

Provide a description of the market(s) in which the goods or services described at 2 (c) are supplied or acquired and other affected markets including: significant suppliers and acquirers; substitutes available for the relevant goods or services; any restriction on the supply or acquisition of the relevant goods or services (for example geographic or legal restrictions;


CQLGA Authorisation Application to the ACCC April 2008 Page 60f 10

6. Public detriments

'fl ,, -

(a) Detriments to the public resulting or likely to result h m the authorisation, in particular the likely effect of the contract, arrangement or understanding, on the prices of the goods or services described at 2 (c) and the prices of goods or services in other affected markets: (Refer to direction 8)

Table 2

CQLGA Authorisation Application to the ACCC April 2008 Page 7of 10

POSSIBLE DETRIMENT Lack of competition

Inequitable wiags in the market

The h n i n g of the conduct forecloses competition

RESPONSE A regional tender process for waste and recyclables collection andprocessing will open up competition to more than one service provider and promote co~npetition for an8 within an indtnrtry sector dominated by a small number of service providers.

Currently there is a lack of competition for the collection and processing of waste and recyclables in Central Queensland - this tender process will open up competition and it is expected that prices for the services will be lowered due to the increase in tonnages and the rationalisation of collection routes.

The form ofprocurement is intended for the maximum number of service providers to compete for a range of services.

There are 5 separable portions and Tenderers may submit Tenders for one or more of the separable portions and the successfil tenderer/tenderer will be required to enter into separate contracts with each coum-I.

The structure of the contracts is intended to allow parties to enter into one contract for each service group, separate contracts for each service group, or a combination of contracts. The duration of this tender for which authorisation is sought is for ten (1 0) years and is not likely to restrict competition as seven to ten (7- 10) years is the accepted timepame within the waste industry for a successfil tenderer to amortise the plant and infiashrrcture expenses required to undertake the contract.

The re- tendering of the contract prior to the end of the ten (1 0) year term will allow competitors in the market to present firther: competitive bids.

Thejive separable portions of the contract allows for more than one successfil contractor

(b) Facts and evidence relevant to these detriments:

Refer to Table 2 above

6. Contract, arrangements or understandings in similar terms

This application for authorisation may also be expressed to be made in relation to other contracts, arrangements or understandings or proposed contracts, arrangements or understandings, that are or will be in similar terms to the abovementioned contract, arrangement or understanding.

37r-r L- t

(a) Is this application to be so expressed?

(b) If so, the following information is to be furnished:

(i) description of any variations between the contract, arrangement or understanding for which authorisation is sought and those contracts, arrangements or understandings that are stated to be in similar terms: (Refer to direction 9)

Not Applicable

(ii) Where the parties to the similar term contract(s) are known- names, addresses and descriptions of business carried on by those other parties:

Not Applicable

(iii) Where the parties to the similar term contract(s) are not known - description of the class of business carried on by those possible parties:

Not Applicable

8. Joint Ventures

(a) Does this application deal with a matter relating to a joint venture (See section 45 of the Trade Practices Act 1974)?

(b) If so, are any other applications being made simultaneously with this application in relation to that joint venture?

Not Applicable

(c) If so, by whom or on whose behalf are those other applications being made?

Not Applicable


rn

Further information

(a) Nme and address of pmon authorised by the applicant to provide additional idbmatim jn relation to this application:

Jenny Mmre Executive Officer Central Queensland Local Government Association (CQLGA) PO Box 1624 ROCKHAMPTON QLD 4700

Telephone: (07) 4927 0111) Email: [email protected]

Dated 16 April 2008

Signed byton behalf of tke applicant

Jmzfir Joy Maom (Full N-1

Executive @er Central QueensIad L q d l3mwrment As#ociaa'on (Position in &&anisation)

CQLGA Atltkorisation Application to the A C E A p d 2008 Page 90f I0

DIRECTIONS

1. In lodging this form, applicants must include all information, including supporting evidence that they wish the Commission to take into account in assessing the application for authorisation.

Where there is insufficient space on this form to furnish the required information, the information is to be shown on separate sheets, numbered consecutively and signed by or on behalf of the applicant.

2. Where the application is made by or on behalf of a corporation, the name of the corporation is to be inserted in item 1 (a), not the name of the person signing the application and the application is to be signed by a pekson authorised by the corporation to do so.

3. Descriie that part of the applicant's business relating to the subject matter of the contract, arrangement or understanding in respect of which the application is made.

4. Provide details of the contract, arrangement or understanding (whether proposed or actual) in respect of which the authorisation is sought. Provide details of those provisions of the contract, arrangement or understanding that are, or would or might, substantially lessen competition.

In providing these details:

(a) to the extent that any of the details have been reduced to writing - provide a true copy of the writing; and

(b) to the extent that of any of the details have not been reduced to writing - provide a 111 and correct description of the particulars that have not been reduced to writing.

5. Where authorisation is sought on behalf of other parties provide details of each of those parties including names, addresses, descriptions of the business activities engaged in relating to the subject matter of the authorisation, and evidence of the party's consent to authorisation being sought on their behalf.

6. Provide details of those public benefits claimed to result or to be likely to result from the proposed contract, arrangement or understanding including quantification of those benefits where possible.

7. Provide details of the market(s) likely to be effected by the contract, arrangement or understanding, in particular having regard to goods or services that may be substitutes for the good or service that is the subject matter of the authorisation.

8. Provide details of the detriments to the public which may result from the proposed contract, arrangement or understanding including quantification of those detriments where possible.

9. Where the application is made also in respect of other contracts, arrangements or understandings, which are or will be in similar terms to the contract, an-angement or understanding referred to in item 2, k n i s h with the application details of the manner in which those contracts, arrangements or understandings vary in their terms from the contract, arrangements or understanding referred to in item 2.


Attach men t I,.:!

central highlands regional council

YOUR REF: OUR REF: CONTACT NAME: BRYAN OTTONE TELEPHONE: (07) 4982 8398 MOBILE: FAX. (07) 4982 1354 EMAIL: Central ORice, PO Box 21 Emerald Qld 4720

19 March 2008

Ms Jenny Moore Executive Officer Central Queensland Local Government Association PO Box 1624 ROCKHAMPTON 6LD 4700

Dear Jenny

RE: CONSENT TO ACCC AUTHORISATION APPLICATION

The Central Highlands Regional Council consents to the Cenwal Queensland L m l Government Association (CQLGA) seeking authorisation from the Australian Competition and Consumer Commission (ACCC) on the council's behalf.

The application is being made under subsection 88 (1) of the Trade Practices A d 1974 for an authorisation under that subsection:

to make a contact or arrangement, or arrive at an understanding, a provision of which would have the purpose, or would have or might have the effect, of substantially lessening competition within the meaning of section 45 of that Act.

Yours faithfully,

Bryan Ottone Acting Chief Executive Officer

ALL CORRESPONDENCE TO BE ADDRESSED TO THE CHIEF EXECUTIVE OFFICER - A l lN : [CONTACT NAME] PO BOX 21 165 Egerton Street Emerald Qld 4720 General Enquiries: 1300 242 686 Fax: 1300 242 687 Email: enquirie~chrc.qklChgovYau

Ms Jenny Moore Executive Officer Central Queensland Local Government Association PO Box 1624 ROCKHAMPTON QLD 4700

L ,.r . r 8

Dear Jenny-+ il 'S, $5?<5 -- -- - - - - - --

CONSENT TO ACCC AUTHORISATION APPLICATION -1 The Gladstone Regional Council consents to the Central Queensland Local Government Association (CQLGA) seeking authorisation from the Australian Competition and Consumer Commission (ACCC) on Council's behalf

The application is being made under subsection 88 (1) of the Trade Pracfices Act f974 for an authorisation under that subsection:

to make a contact or arrangement, or arrive at an understanding, a provision of which would have the purpose, or would have or might have the effect, of substantially lessening competition within the meaning of section 45 of that Act.

I:. ~

d

19 March 2008

Ms Jenny Moore REGIONAL COUNCIL

#.-:I. -.-*- # (Reply lo,, .y3,i :i .-:-:>:

aOCdsou~d Business Unlt Powx 1 $? Wrence Q 4707

407) 4964 5400

19 March 2008

Ms Jenny Moore Executive Officer Central Queensland Local Government Association PO Box 1624 ROCKHAMPTON QLD 4700

Rockhampton Office 232 Bolsover St, Rockhampton Gracemere OfRce 1 Ranger St, Gracemere Mount Moraan OfRce 32 Hall St, Goirnt Morgan Yeppoon Office 70 Anzac Parade, Yeppoon

Dear Jenny

CONSENT TO ACCC AUTHORISATION APPLICATION

The Rockhampton Regional Council consents to the Central Queensland Local Government Association (CQLGA) seeking authorisation from the Australian Competition and Consumer Commission (ACCC) on the Council" behalf.

The application is being made under subsection 88 (1) of the Trade Practices Act 1974 for an authorisation under that subsection:

to make a contact or arrangement, or arrive at an understanding, a provision of which would have the purpose, or would have or might have the effect, of substantially lessening competition within the meaning of Section 45 of that Act.

Attachment 2 I

wdf $6 ccii&&d&.$dl nubi(qla r.GrJ.; ~:i.-rt+. . ; 1.i ,

Central Queensland ~ b c a i ~kernment Association

+ ' '@pplicaticm for Authorisation *4~:;4 -. , w e - 7 ,- .*- ,>-- ... ,

A u s t r m C~mpetition -. and Consumer Commission , t~~3:tfinqmfijv&.

: * .k:! t*mtj 1:) #.I

(ACCC)

Proposal to tender for Waste Collection and Recyclables Collection and Processing Services

-

Section 4 -Ulic JZ n f&Clqi.zns ,'f&yfikpp-& f,''&-f)j ,*Il ). * . t o ..

(a) Argument. h suppon of au %i orisation (6) Facts and evidence relied upon in support

of these claims 7.v- --

-h:F:-lrp r*. - .,: .,. ..- r e 4 .# . a -

t . i j $ ~ ~ u l ~ ~ l , ~ c f f . ~ f ?i.w.: . .* 2 ,: vr - i l L; '. .

Attachment 2 CQLGA Submission lo the ACCCfbr Authorisation Page 1 of 22

PREFACE

This attachment provides supporting information to the application made by the Central Queensland Local Government Association (CQLGA) on behalf of the Rockhampton, Gladstone, Central Highlands, and Isaac regional Councils, for authorisation to the Australian Competition and Consumer Commission (ACCC) under the requirements of the Trade Practices Act.

The attachment addresses Section 4 - (a) arguments in support of authorisation, and (b) facts and evidence relied upon in support of these claims of Form B - Agreements Affecting Competition: Application for Authorisation.

EXECUTIVE SUMMARY

The Rockhampton, Gladstone, Central Highlands, and Isaac Regional Councils have all collectively agreed through formal Memorandum of Understanding (MOU) to participate in the development of a regional tender process for a waste and recyclables collection and processing services contract.

The CQLGA, on behalf of the above mentioned councils seek:

1 Interim Authorisation to Tender; and, 2 Final Authorisation for the provision of waste and recyclables collection

and processing fiom all residential premises for the combined local government areas of Rockhampton, Gladstone, Central Highlands, and Isaac Regional Councils.

The Councils are seeking interim authorisation fiom the ACCC as soon as possible as waste collection contracts fiom the former councils that now make up the new Central Highlands and Isaac Regional Councils have either expired and are being extended month by month or due to finish by July 2008.

Former councils in these two regions have been working collaboratively for a number of years to align their waste collection contracts with the intent to develop a joint tender process to gain the most cost and resource effective contract across the region. Due to the long distances fbm each town, and fiom the coast, and the relatively small population bases, individual waste collection contracts have proved expensive, and consequently there is no kerbside recycling.

This proposed tender is a regional and holistic approkh to waste servicing arrangements in Central Queensland for domestic waste and recyclables. Together the four Regional Councils will be able to deliver significant financial, social, and environmental benefits to their respective communities.

The intent of this regional contract is to:

D promote competition and equitable dealings in the market, and allow for the maximum number of service providers to compete for the contracts; achieve cost savings in waste services for communities; and, develop further efficiencies in landfill management and further investigation into alternative waste technologies due to the combined volumes collected.

The implementation of this proposed tender will result in a community benefit that will comprehensively outweigh the detriment to the public constituted by any lessening of competition that would result or be likely to result.

Attachment 2 CQLGA Submipsion to the ACCC for Authorisation Page 2 of 22

SECTION 1 INTRODUCTION

1.1 Interpretations

As of 15 March 2008 the named councils in this application came into being as a result of Queensland State Government legislation - the Local Government Reform Implementation Bill 2007 - an Act to provide for the implementation of structural reform of local governments. This reform has included the amalgamation of the fourteen (14) former councils into four (4) regional councils involved in the development of the regional contracts that are the subject of authorisation.

This tender document has been developed for the new amalgamated councils following the quadrennial Local Government elections on Saturday 15 March 2008.

U . ** . L." - . , . W application specifies the four new councils - Rockhampton Regional Council, . , . _ a

one Regional Council, Central Highlands Regional Council, and Isaac Regional - .

).- Chmcil. However, references will be made to the former councils in relation to

... . w e n t contract details etc throughout the application due to the recent amalgamation pmcess of the new regional councils. Table 1 provides a list of former councils that haye tgpdganated t9 qeate the new regional councils.

Table 1 New and Former Councils in Central Queensland (Post 15 March 2008 Local Government Elections)

A U a e w 2 CWGA Subnuhion to the ACCCfbr Authorbation Puge 3 of 22

New Council

Rockhampton Regional Council

Gladstone Regional Council

Central Highlands Regional Council

Isaac Regional Council

Former Councils

Rockhmpton City Council Fitzroy Shire Council Livingstone Shire Council

Mount Morgan Shire Council

Gladstone City Council Calliope S;hire Council Miriam Vale Shire Council

Emerald Shire Council

Peak Downs Shire Council Duaringa Shire Council

Bauhinia Shire Council

Broadsound Shire Council

Nebo Shire Council Belyando Shire Council

For the purposes of this application, specific words and phrases will have the following meaning:

ACCC means the Australian Competition and Consumer Commission and is referred to as the Commission;

CQLGA means the Central Queensland Local Government Association and is referred to as the CQLGA. The CQLGA is the peak regional local government organisation in Central Queensland and is facilitating the tender process on behalf of the Councils;

Central Queensland Waste Management Strategy (CQWM)

Councils mean the Rockhampton Regional Council, the Gladstone regional Council, the Central Highlands Regional Council, and the Isaac Regional Council;

Conduct means the ability to tender and contract the services;

Domestic Waste Stream means a component of the municipal waste stream generated h m households or residential premises and includes all household waste presented for collection by council or its contractor, and includes the combined putrescibles waste, recycling and green waste streams, and is the sum of all domestic waste streams;

Green Waste means organic material generated fiom gardens and lawns and includes putrescibles garden organics (grass clippings) woody garden organics, trees, limbs, stumps, and rootballs, but excludes food wastes;

Materials Recovery Facilities is a specialised plant that receives, separates and prepares recyclable materials for marketing to end-user manufacturers;

Mobile Garbage Bin (MGB) means a container of 120,140, or 240 litre capacity with wheels and a securely attached lid hinged at the back;

Putrescible Waste means the component of the waste stream liable to become putrid, and has the ability to break d m in a landfill and generate landfill gases and leachate;

Recyclables or Recyclable Material means material having properties that enable subsequent reprocessing into other products and, or materials for reuse;

Service Provider means an entity able to accept and dispose of residual waste;

Waste The definition of waste in Section 13 of the Queensland Environmental Protection Act 1994 refers to materials surplus to, or left over or unwanted by products fiom domestic, commercial, industrial and other activities. The definition includes waste gases, liquids and solids, as well as energy, and notes that things can be waste whether or not they are "of value".

Waste Collection Services means the Service, ie, system of services comprising of the gathering and transporting of waste, organic material and recyclables that is provided by the Councils.

Waste Transfer Facility (WTF) means facilities where hauling companies, businesses and residents can bring their waste. The waste is consolidated at the transfer stations and then transported to a landfill for disposal or to a materials recycling facility for processing.

Source: St George (Sydney) Region of Councik Application to the ACCC October 2006

Attachment 2 CQLGA Submimion to the ACCC for Authorisation Page 4 of 22

1.2 R e h n t State Legislak'Molicies

The relevant Queensland legislation and policies relating to waste management are the Environmental Protection Act 1994, Environmental Protection (Waste Management) Policy 2000 (Qld), and Environmental Protection (Waste Management) Regulation 2000 (Qld).

The Policy and the Regulation uorfy waste requir&ents and address waste streams previously not subject to legislation. This has required changes to some existing legislation, including the repeal of the Litter Act 197 1 and the Environmental Protection (Interim Waste) Regulation 1996 (which was incorporated into the Regulation on 3 1 August 2007).

The Policy provides a strategic fitmework for managing waste in Q u w l d . l[t d this by establishing a preferred waste management hierarchy and p r i n c i p h , ~ 6 +

whieving good ~ r n ~ t . I

\

I ' ..

.: +Ill,* - . kt %'l':. : 5

1. Minimising both the volume and harmfulness of waste generated; 2. Minimising the amount of waste disposed of to the environment by

maximising reuse and recycling; d, 3. Ensuring that the residential waste is disposed of (via landfills, sewers, and

smoke stacks.

1.3 The Central Queensland Waste Management Strategy

Under the provisions of the Queensland Environmental Protection Act 1994, Environmental Protection (Waste Management) Regulation 2000 and the Environmental Protection (Interim Waste Management) Regulation 1996, councils are required to develop a Waste Management Strategy for the local government area.

Attachment 2 CQLGA Submission to the ACCCfbr Authoriratlon Page 5 of 22

Councils in Central Queensland have developed the Central Queensland Waste Management Strategy (CQWMS) with the cooperation of councils across the region. The CQWM is a major project for the Central Queensland Local Government Association (CQLGA) and the purpose of the strategy is to develop methods to reduce waste production, promote resource recovery and to realise better management of solid wastes and secondary resources within the CQLGA region. The strategy ties in with Local Government obligations under the National Packaging Covenant (NPC) to reduce the quantity of waste to landfill and fulfils local government requirements to develop a waste management strategy for their communities.

The Strategy will:

Produce economic benefits for the region via cost savings, employment and business generation; Reduce the risks to Councils and public in the operation of waste services; Promote resource sharing and utilisation between Councils (knowledge, contracts, staff, plant, facilities, etc); Increase efficiency and professionalism in the operation and management of wastes; Increase waste management and utilise knowledge within the communiw, and Show strong societal leadership in the area of sustainable development.

The state has recognised the value of the CQ councils working regionally and collaboratively - 2 years ago the strategy was a State finalist in the inaugural EPA Sustainability awards and the State government has sighted the CQWMS in two of its recent 'stronger councils' publications on local government structural reform in 2007 as being the way forward in local government in Queensland.

The activities of the CQWM group have been applauded by the State government and have been used as an example of the way forward for local government in Queensland.

Regional contracts have been a key focus of the strategy and along with the situation described below, the small market catchment for each of the councils, the lack of response to tenders when invited by individual councils for their existing contracts and the impending amalgamations, the CQWM group agreed to undeftake joint tendering for a waste and recyclables collection and processing in order to:

i) increase the interest from within the waste industry to tender with a viable tender that includes a larger catchment area and therefore a more competitive price for waste services;

ii) to implement the structural reform processes advocated by the State government including the associated EPA Waste Management Policy;

iii) reduce overall cost and increase logistic effectiveness for waste management services in Central Queensland. Until this proposed contract, many CQ communities have been unable to participate in best practice kerbside recycling and processing due to the small size of the populations of each councils and the transport logistics associated from living inland fkom the major population centres)

iv) The joint contract approach reflects the aims and objectives of the CQWMS and the intent of the EPA Waste Management Policy.

Attachment 2 CQLGA Submission lo the ACCC for Authoriration Page 6 of 22

1.4 Councikr and Service Profiles

The Local Government Reform Implementation Act 2007 amended the Local Government Act 1993 to put in place arrangements for structural reform of Councils, including changes to Council areas. After transition to new administration following the 15 March 2008 local government elections, the 14 Councils previously within the area in respect of which Services are to be supplied have been amalgamated to 4 in number.

Table 2 and Map 1 provide information on the profiles of the new councils.

Table 2 - Council Profiles

1.4.1 Rockhampton Regional Council

Council

R o c h p t o n Regional C o d 1

Gladstone Regional Council

Central Highlands R e g i d Council

Isaac Regional Council

TOTAL

Rockhampton Regional C;omcil is the local government authority representing the previous Councils of Fitaroy Shire, Livingstone Shire, Mount Morgan Shire and Rockhampton City. The region has a combined population of 107,540 people and the major urban centres for the council inelude Ro~khampton City, Yeppoon, Gracemere and Mount Morgan respectively.

Rockhampton is the major regional city for Central Queemland (population of 60,499) with all the major edwtional, health, commercial government, retail and financial activities for the region. Rockhampton is the centre for all major road and rail networks. k significant amount of jobs in Rwkhampton service the manufacturing and processing sectors associated to the primary production of the surrounding rural area.

Population

107,540

53,974

28,276

21,178

2 10,968

Rockhampton is the transport hub for the area providing access to road, rail, air and sea transport. An international standard airport capable of handling B747 and other wide bodied aircraft is located at Rockhampton.

Area (sq kms)

18,361

9,822

60,759

. 58,458

147,400

1.4.2 Gladstone Regional Council

Covering an area of 9,822 square kilometres, encompassing the local government areas of Gladstone and Calliope, this sub-region makes a disproportionately large contribution to the Australian and Queensland economies. In value terms it accounts for approximately 17.9% of the nation's exports and 19.3% of Queensland's international trade. [ABS, 20011

This area possesses an international advantage as a resource processing, metals smelting and light metals founding location.

Allachmenf 2 CQLGA Submission to the ACCCfor Aulho&alion Page 7 of 22

It has the advantage of a location that is adjacent to a significant coal based energy province whilst also possessing a world class port. Reliable competitively priced electricity is available fkom the Queensland electricity grid, to which Gladstone supplies in excess of 30% of the state's usage. The area is also serviced with natural gas.

1.4.3 Central Highlands Regional Council

The Central Highlands Regional Council is the new local government authority for the previous shire councils of Emerald, Bauhinia, Duaringa, and Peak Downs. The town of Emerald is the regional centre for the Central Highlands and Central Western Queensland.

The projected 2021 population for the Central Highlands sub-region is 29,43 1 people with the majority of the growth to occur in the Emerald Shire. [Dept of Local Government and Planning 20011

Major industries in this sub-region are crop production (primarily cotton, peanuts and grains), horticulture (primarily mandarins and table grapes), beef and sheep production and coal mining. Other prominent industries include hardwood forestry, gemstone, kaolin and aggregate extraction, metal product and machinery manufacturing, education services, tourism and a strong commercial and retail base.

The Emerald Irrigation Area is recognised for its citrus and table grapes produce, and is the most dominant citrw growing area in Queensland, while the Central Highlands Gemfields is the only commercial sapphire production area in Queensland. Rail transport provides the critical means of transport to deliver coal to the ports of Gladstone and Mackay

1.4.4 Isaac Regional Council

The new Council, located in Central Queensland includes the former shires of Belyando; Broadsound and Nebo. The region is located in the Bowen Basin and is economically dependent on the coal mining industry. Reasonable transport links exist between the communities and the region has the highest per capita income in Queensland. Moranbah with a population of approximately 8,000 is the largest town in the region.

The Isaac Regional Council covers an area of 58,458 square kilometres and has an estimated resident population of 21,178. The Regional Council covers the towns of Carrnila, Clermont, Coppabella, Dysart, Glenden, Middlemount, Moranbah and St Lawrence and the villageslcommunities of Clairview, Greenhill and Ilbilbie.

1.5 Annual Growth (Table 3)

Table 3 provides medium series growth rates for the whole of the region as predicted by the Planning Information and Forecasting Unit of the Department of Local Government, Sport and Recreation published August, 2007:

Attuchment 2 CQLGA Submission to the ACCC fw Adorisat ion Page 8 of 22

1.6 Total Length of Roads

TOM kg& of roaris, ~~ sealed and d e d lanes, as reported in Qu-sland Tremgy C ~ e o n h- Reports, 2007:

-w&Ml 6,234 l d o m m (excluding the Shire of

Gladstone R e g i d Coutl.ci1 3,726 ldlometres

Central Highlmds Regional Council 7,245 kilometres (excluding the Shire of Emerald)

4,805 kilometres Isaac Regional Council

1.7 Current Contractual Arrangements

Residential Waste and Recyclables Collection Services

In relation to the tender process, the waste and recyclables collection services are only applicable to the Central Highlands and Isaac Regional councils.

Six of the seven councils involved in the Central Highlands currently all use the same service contractor - JJ Richards. Bauhinia Shire Council is the exception as they run their o m truck with day labour. .Each of these 6 councils over a period of time have put out indiviM tenders and JJ Richards have been successll usually because they have been either the only tenderer or the tenderer with the lowest price in a very small tender rwone.

Contracts for several of the f m e r councils in the Central Highlands and Isaac Regional ecwatcls have expired and have been extended on a manth by month basis so that the eounds are aligned for the implementation of this regional approach to collection services.

Recycling collection will be introduced through this regional. tender process for the first h e to the Central Highlands R e g i d Council communities of Emerald, Capella, Springsure, Duminga and Blackwater. The councils that now form the Isaac Regional Council had a recycling collection service that involved a split bin arrangement that was largely unsuccessful due to the bin (people contaminated the recycling by including domestic general waste). The Isaac Regional Council communities will thrdugh the tender process, begin using Best Practice Kerbside recycling (two bins).

Attachment 2 CQLGA Submission to the ACCCfbr Authorisation Page 9 of 22

1.7.1 Collection and Transportation Service Summary (at August 2007)

Councils have made efforts to provide up-to-date information. The collection information for the Councils below has been provided as at August 2007, except for Belyando Shire, which has been provided as at September 2006.

1.7.2 Total Number of Domestic Services (Tables 4&5)

There are 18,542 domestic services (240L Bins and 240L Split Bins) in Central Highlands and Isaac Regions, as shown in the tables below:

Table 4 Region of Central Highlands (240L Bins)

Table 5 R@m of Isaac @L Split Bins)

Regional Former Council Shire

I Town ( Domesa'c 1 Domestic

I town 1 shim I

I (m. of - bins) I (no. - of bins)

Braadsound* Dysart 1,013 2,320

Middlemount 884 St Lawrence 423

TOTAL 10,531 10,531

* Including 240L caravan sewices

Attachment 2 CQLGA Submission to the ACCC for Authorisation Page 10 of 22

Residential Recyclables Processing Services

Recyclables collection services exist in the new coastal regional councils of Rockhmpton and Gldstone. tomages curreatly collected are provided in Table 6: - 3 : . 7 I ? 3 I 2 h f ! 1 ; A I . ' P 8 , 1

1, . . 1 26

Table 6 0 , . .

T

Bauhinia Shire 510* unknown 700*

Isaac Broadsound Shire 1,199* unknown 1017*

Belyando Shire 1643 * unknown 9,900*

Nebo Shire 586* unknown 800* ~"f-9.. w w - 1 - 1 .nw.r.r;r LIZ- F '. I

brnirnl -7 -~h=td r - r t l Lsr f r t - m r 4

In Rockharnpton and Gracemere recyc1ables are wllected (a two bag system once a week) using council day labour. In Yeppoon and Emu Park (former Livingstone Shire) residents drop off their recyclables at cmmmmity collection points and are collected by council workers. The former Gladstone City and Calliope Shire Councils -

have a two bin syst ables are collected fortnightly. YS .\ I"-.-.-..--.. . t& r..fimim1tc$9,4.

Recyclables fbm Rodchampton are processed in house by the Rockhampton Regional Council through a council owned and operated Materials Recovery Facility (MRF).

Gladstone and Calliope recyclables are transported uncompacted to Brisbane. Both regional councils have participated in an Expression of Interest for the development of a Regional MRF that was undertaken in late 2006. The market responses to the Expression of Interest indicated very clearly that a minimum of 8,000 tonnes of recyclables were required tb make a MRF viable in the region. In order to achieve this base requirement, councils will need to work collabmtively to achieve the desired tonnage. The more tonnes over this base rate means a cheaper rate will be

Atkachment 2 CQLGA Submission to the ACCC for Authorisatidn Page 11 of22

SECTION 2 - DESCRIPTION OF THE PROPOSAL ('CONDUCT')

2.1 Preamble

Historically local government in Queensland has been responsible for waste collection and disposal in the community. However, due to a number of drivers for change, including legislative change, community expectations, shortage of landfill space and increased waste quantities, the responsibilities of local government in waste management have evolved significantly over the past decade.

The management of waste has now become an important environmental, social, and economic issue for councils. In many instances, councils are finding it necessary to identifl and implement economically viable and environmentally sound means of recovering resources for reuse, recycling and energy recovery prior to implementing sustainable strategies for the management of the residual waste stream to protect public health and the environment

The legislative requirements for how councils manage waste in Queensland are governed by the provisions of the Queensland Environmental Protection Act 1994, Environmental Protection (Waste Management) Regulation 2000 and the Environmental Protection (Interim Waste Management) Regulation 1996.

Among other things, Councils are required to develop a Waste Management Strategy for the local government area and have powers to regulate waste vehicle movements, unlawful disposal of waste and litter problems within the area.

Since 2000, councils in Central Queensland have been working together collaboratively to develop and implement a regional waste management strategy. Their commitment has included financial resources to employ staff to implement the strategy.

In April 2007, the Queensland government announced sweeping structural reforms for local government, culminating in the amalgamation of councils across Queensland on 15 March 2008. The reform has resulted in fewer councils, down from 157 (including 32 Aboriginal and Torres Strait Islander Community Councils that became local governments during the last four years) to 73 (which includes 12 continuing former indigenous councils and 2 new indigenous councils).

A key message fiom the State government to local government is the concept of regionalism - a focus on the region as a space for the delivery of local governance and services. In principle the State government is indicating to the new regional councils a preference for regional scale service delivery. This is consistent with the drivers of the government's reform program which are the medium to long term sustainability of local government and the need for greater regional collaboration in infrastructure and regional planning in general.

The key factors that have been outlined above:

The State government's desire for a regional approach through structural reform; The regional approach to strategic waste management by Central Queensland councils; and, The State legislative requirements for local government baed waste management strategies;

have collectively shaped and driven the development of regional contracts for the new regional councils in Central Queensland, specifically in waste management.

Attachment 2 CQLGA Submission to the ACCC for Authorisation Page 12 of 22

As also previously mentioned, resource recovery is the best environmental, social and economic way to manage waste for councils. In Central Queensland, many of the former councils (inland) were unable to participate in best practice kerbside recycling due to the long distances fiom an established MRF for councils to tramport recyclables.

Likewise, waste collection contracts for these Central @-land inland councils have been expensive as a result of lack of interest from contractors due to the small population base, underutilisation of trucks, and, distance h m the coast were activity and urban development is more concentrated.

Of the seven former inland councils in the Central Highlands region, six have individual contracts with the same contractor.

On the coast, the large r e g i d councils of Rockhampton and Gladstone (major regional communities in the region) are currently or are about to transport their recyclables uncompacted to Brisbane.

The farmer Rockhampton City Comcil owns and operates a MRF that operates on a 2 bag system - one far glass, aluminium, steel and plastics, and another for newspaper and cardbod. In June 2008, Rocklmmpton Regional Council is going to introduce a 2 bin kerbside collection service for waste and recyclables.

The current MRF in Rockhampton will be decommissioned as the h n t end of the processing plant is too costly to adapt from a separated 2 bag system to a commingled 2 bin system. As a consequence, Rockhampton Regional Council will be transporting their recyclables uncompacted to Brisbane (7 hours by road) in the interim until a new regional processing system can be developed.

2.2 Tks Proposal

Four (4) newly amalgamated councils in Central Queensland intend to jointly tender for Waste and Recyclables Collection Services and Recyclables Processing Services and a number of council specific ancillary services as outlined below in Table 7:

Table 7 Waste and Recyclables Collection and Processing Contract

Attachment 2 CQLGA Submission to the ACCCfor Authorbation Page 13 of 22

SPECIFICATION

Waste and Recyclables Collection Services (Specification A)

Recyclables Processing Services (Specification B)

Bulk Waste Services (Specification C)

Landfii Services (Specification D)

Liquid Waste Services (Specification E)

SEPARABLE PORTION Central Highlands ONLY Isaac ONLY Central Highlands AND Isaac

Rockhampton AND Gladstone ONLY Central Highlands and Isaac ONLY Rockhampton AND Gladstone AND Central Highlands AND Isaac Isaac ONLY

Central Highlands (Blackwater) ONLY

Central Highlands ONLY Isaac ONLY Central Highlands AND Isaac

The tender and consequent contract will have a standard set of Conditions for Tendering and Conditions of Contract and other supporting documents and 5 separable portions:

Specification A Waste and Recyclables Collection Services Specification B Recyclables Processing Services Specification C Bulk Waste Services Specification D Landfill Services; and Specification E Liquid Waste Services

Tenderers may submit Tenders for one or more of the separable portions and the successful tendererltenderers will be required to enter into separate contracts with each council. The scope of works above defines the general services that each party may be interested in contracting. The structure of the contracts is intended to allow parties to enter into one contract for each service group, separate contracts for each service group, or a combination of contrack

The inland councils of Central Highlands Regional Council and the Isaac Regional Council have identified an opportunity to tender for not only waste collection services but also recyclables collection services. Current waste collection contracts for these 2 councils have expired and are now running on a month by month extension with their existing contractor JJ Richards.

All four (4) councils will be .tendering for the Recyclables Processing Services and there is a very clear opportunity for a regional approach to achieve the best tonnages to make recyclables processing in Central Queensland viable for the whole of the region.

This proposal promotes efficiencies (economic, environmental, and social) in the following areas of the proposed combined services:

I Collection Eflciencies

synchronisation of the collection contracts starting times; streamlining of collection systems; improvements in the design of collection routes through cross boundary collection; optimisation of collection fleets; and, the ability to introduce new services through the collective resources of the councils.

2 Processing Ecfficiencies

a regional materials recovery Ml i ty processing plant can be located in the region due to the combined tonnages of the region; inland councils will be able to participate in recycling; a greater range of recyclables can be processed; and, a regional kerbside recycling system for Central Queensland

3 Education

M e r cost savings and economies of scale through a regional education program and associated initiatives;

Attachment 2 CQLGA Submission lo the ACCC for Authorisation Page 14 of 22

a comprehensive education program to the region's schools by combining the resources of the regional councils; a consistent and 'whole of region' approach to educative material and marketing; and, a reduction in costs due to resource sharing and the regional 'roll out' of the progr=.

4 Services

streamlining collection systems and patterns; and, ability to inmase market share as a result of the 4 regional councils combining their resources.

5 Bins

cost savings in the regional procurement of bins due to increased purchasing power; and, consistency in bin type, colour and size across the region.

6 Waste Volumes

waste disposal costs will be reduced due to increased tonnages across the contracts; increased rates of waste diversion from landfills in the region; and, increase in market for the processing of recyclables.

Additionally a regional ten& proass involving the regional councils in Central Queensland supports the policy direction that the Queensland State government has determined in relation to the structural reform in local government. The cost efficiencies resulting from councils cooperating in a regional tender process will be beneficial to both the participating councils and thk successful contractorls, as vehicles will be fully utilised as well as labour creating savings for the councils and a more competitive tender price for contractors.

The contracts will promote competition and equitable dealings in the market, and allow for the maximum number of service providers to eompete for the contracts.

It is also possible, as a result of this tender process that there will be hrther efficiencies in landfill management and further investigation into alternative waste technologies due to the combined wS,- collected.

Attachment 2 CQLGA Submission lo t f r e ACCC for A h r i s a t l o n Page 15 of 22

SECTION 3 - INTERIM AUTHORISATION

The Councils request an interim authorisation to:

Allow councils to prepare tender documentation and invite Tenders fiom interested parties wishing to provide waste and recyclables collection and processing services;

Evaluate Tender submissions;

Prepare Tender recommendations to the Councils' executives; and,

For Councils' executives to endorse the recommendations of the Tender panel and seek to enter into contractual arrangements pending the determination of the Commission.

The request for Interim Authorisation is made on the basis that:

1 No contracts will be entered into until the ACCC determination is made.

2 Such an Interim Authorisation will not prevent the market being able to return to substantially its pre interim authorisation state, as no binding agreements will be entered into by member councils to parties submitting tenders.

SECTION 4 - AUTHORISATION REQUESTED FOR THE COUNCILS TO CONTRACT COLLECTIVELY FOR THE PROVISION OF WASTE AND RECYCLABLES COLLECTION AND PROCESSING SERVICES

The Councils request authorisation to contract the Service fix the following reasons:

4.1 Legal Requirement

The Councils may be in breach of Section 45 of the Trade Practices Act if they proceed to collectively tender and contract the Service, unless authorisation is sought and given by the ACCC.

4.2 Savings in Costs to the Council Communities

The Councils firmly believe (based on experience) that a collective regional approach is the most appropriate way of attaining equitable benefits for the communities of all member councils - refer to Tables 8 and 9.

A joint tender will provide the opportunity to develop a tender that includes:

the best elements that has worked for each Council in their individual contracts; the incorporation of new efficient elements (ie recyclables collection and processing); and, economies of scale that can be gained through a collective approach.

Attachment 2 CWGA Submission to the ACCC for Authorisation Page 16 of 22

4.3 Changing Legislative a d Communi@ Environment

The Queensland State Government, through Queensland Environmental Protection Act 1994, Environmental Protection (Waste Management) Regulation 2000 and the Environmental Protection (Interim Waste Management) Regulation 1996, has introduced a number of waste initiatives based on the reduction of waste to landfill and resource recovery. rn . r;rtjt&; . r;ri!i'rcn. 1

:* -. ~nvironmentally, this collective tender a p l n ~ a C ~ will:

Divert a significant amount of waste from landfills in the region; Provide best practice kerbside recycling to 4 regional councils; Implement the objectives and actions of the Central Queensland Waste Management Strategy; Conform with the EPA Waste Management Policy and regulation.

Likewise this regional tender will support the structural reform agenda for local government that the Queensland government is currently implementing through the development of regional contracts.

The collective tender approach will provide kerbside recycling to communities who previously did not have it. The implementation of kerbside recycling will meet the

' f . sz q& a service.

I .

At@hmnt 2 CQLGA Submirsion to the ACCCfbr Adm&afion Page 17 of 22

SECTION 5 - GROUNDS FOR AUTHORISATION a".

5.1 Supporting Information

The following table (Table 8) identifies key elements of the conduct that has been developed by the participating councils. It details - who will benefit fiom this action, how the conduct will be implemented, the reason the tirnefkame is sought, and the issues that could change the detail of the conduct.

Table 8

Attachment 2 CQLCA Submission lo he ACCC for Authorhation Poge 18 of 22

ISSUE Beneficiaries of the conduct

Distribution of the benefits

How the conduct is intended to operate

Appropriateness of the authorisation period sought

RESPONSE Beneficiaries will be:

The councils, the ratepayers, the regional community; and, The waste industry businesses who will have a greater opportunity to tender for this contract.

Benefits are likely to be distributed through: *. Reduction in waste collection costs to councils

An opportunity for councils to recycle who previously have not, due to the size of the collection catchment and distance *om recycling markets; The extensions in the life of current IandBlls due to increased diversion rates through recycling; and, An expanded market for the collection of waste and the collection and processing of recyclables.

One tender process with four (4) separate contracts operating under one cross boundary set of services.

Tenderers may submit Tenders for one or more of the separable portions and the successful tenderedtenderers will be required to enter into separate contracts with each council.

It is intended that should ACCC authorisation be granted, the participating councils would commence services *om October 2008.

A 10 year period of authorisation has been sought fiom the ACCC by the participating councils, in line with the terms of the intended contract.

This 10 year period will allow councils to eflectively engage with their communities to develop a waste management approach that will deliver ecologically sustainable outcomes over a longer timefiame.

The objectives of the Central Queensland Waste Management Strategy to develop methods to reduce waste production, promote resource recovery and to realise better management of solid wastes and secondary resources within the CQLGA region will be realised over the nominated period of I0 years.

5.2 Tire Community Benefit

This application is submitted on the basis that the public benefit of this proposed . conduct will far outweigh any anti competitive detriment that may be derived fkom

such action.

Table 9 below identifies the objectives of public benefit to be addressed, provides evidence from the councils that these obje'ctives can be achieved and identifies the benefits which will be gained h m thee actions.

Table 9

Local government in Queensland is mspcmsible for

OBJECTIVE

waste and mycling collection and disposal in the community

-- -

EVIDENCE BENEFIT

Business efficiency and consistent servicing can be achieved though a collective tendering process.

The intent of the participating councils is to implement a sd ofcontracts for the provision of waste a& recycables collection and processing that are structured to act in the best interests of the community in deliveringpositive economic, social and environmental benefits for the region

Currently there is a regional green waste contract in place that involves 3 of the 4 regional councils and it has achieved:

Very competitive pricing for the mulching of green waste at council landfills; Financial benefits to councils who prm'wly contracted individually through a lower price; A mulching service to a number of inland councils who previously could not aftract a contractor due to the long distances and low volumes of green waste; and, One regional price for all councils regardless of distaneefiom the urban areas in the region.

The councils proposal should be measured in reference to this objective.

From this example the following benefis are expected for the regional tender: The reduction of waste servicing costs (eg increased purchasing power through collective bin procurement, improvement in route design, jleet e#ciencies, and reduction on the total number of collection service vehicles) to councils and their communities.

The introduction of recycling to inland communities at a viable price.

mese benefits - a lower price overall and a consistent level of servicing across the region, have been passed on to the ratepayers.

There will be a streamlined and consistent waste and recyclables collection and processing service for councils in Central Qld.

Attachment 2 CQLGA M m h i o n lo the ACCCfbr AuIhorLcation Page 19 of 22

Attachment 2 CQLGA Submisswn to the ACCC for Authorisation Page 20 of22

-

OBJECTIVE Environmental goals as per the ' EPA policy for waste management

Promotion of cost savings

Improvement in resource allocation, and the quality and safety of the senrices

EVIDENCE The regional waste and recyclables collection and processing contract will:

Introduce best practice kerbside recycling to 2 regional councils that have not been able to recycle; Generate a signijicant increase in the volume of recyclables that will be divertedfiom landfill; and, Create a more egective and eflcient waste management system through a 'whole of region' approach with the inclusion of councils not previously involved in recycling

The w e n t Green Waste Contract has provided sigm3cant cost savings to all participating councils and a regional waste and recyclables collection and processing contract will achieve similar results through:

A regular and afordable service to inland councils; and, Signz3cant transport and servicing savings due to combined tonnages; Transaction cost sharing for the procurement of services.

The focus'on Occupational Health and Safety and the use of a regional tenderingprocess for the Green Waste contract has improved the quality of the service provided (mulched particle size) to councils, the type of machinery used and has resulted in the implementation of a standard operating process for all councils.

BENEFIT More landfill space saved fiom the diversion of recyclables therefore extending the life of the current landfills in the re@on-

More resources recovered for ~~e and less virgin materials required-

A viable regional Materials Recovery Facility due to the required tonnages being achieved. Economies of scalefiom the provision of a regional service to councils one contractor

Increased diversion rates means environmental and

cost savings associated with the landfill (more airspace, less inert material buried) and the environment in general (recyclables reused)

Transaction cost sharing for the procurement of services.

Streamlining and consistency of services

potential improvement in h ine s s e$ieiency

Regular servicing for all councils

A systems approach based on the Total Quality Management principles.

X 3 Minimisation of Anti- Comgdve Detriment

It is possible that councils could develop wasbe collection contracts specific to their new regional council boundaries.

ACTION Promotion of competition

Promotion of equitable dealings in the market

The framing of the conduct to gh.im,ise mtridhm to competition

! '(,"

However the implications f a this approach to a waste collection contract for the inland regional councils of Central Highlands and Isaac are likely to be as follows:

BENEFIT A regional tenderprocess for waste and recyclables collection andprocessing will open up competition to more than one service provider and promote competition for and within an indwtry sector dominated by a small number of service providers. T h e m ~Jfprocurement is intended for the maximum number of service providers to compete for a range of s & m s .

There are 5 separable portions and Tenderers may swbmit Tenders for one or more of the separable portiom and the successJ;l tenderer/tenderers will be req&ed to enter into separate contracts with each cmncil.

The structure of the contracts is intended to allow parties to enter into one contract for each service group, separate contracts for each sewice group, or a combination of contracts. The darralion of this t& for which authorisation is smgkt is fir ten (10) year8 and is not likely to restrict comp&ion as seven to tea (7- 10) years is the accepted W f i a m s within the waste industry for a st~messfil tenderer ts amrtzse the plant and infimtructure expenses required to undertake the c~ntract.

Tka? re- tendering of the contract prior to the end of the ten (10) year term will allow competitors in the market to present firther competitive bib.

1 Lack of interest fbm the marlcet due to the small number of collection services; 2 Councils having to accept tenders that are not competitive and that are

expensive; 3 The unit cost of the service would continue to rise; 4 Collection inefficiencies would remain; 5 A lost opportunity for a greater volume of waste and recyclables to be

aggregated and processed.

Recycling collection in the Central Highlands and Isaac Regional Councils would not be possible due to the lack of aggregation of recyclable tonnages to reduce long distance haulage costs and small volumes. Altachmenf 2 CQLGA Submission to the ACCCfir Auhtfsation Page 21 of 22

The processing of recyclables regionally is not likely to eventuate without the aggregation of tonnages from at least two of the four councils, namely Rockhampton and Gladstone regional councils. At this stage neither of these two councils could develop a viable MRF on their own based on the benchmark minimum tonnage (8,000 tomes) that emerged fkom the EOI process.

The Central Highlands and Isaac Regional Councils will not be able to attract a waste contractor to develop a MRF for their cauncil catchment areas individually. As a result, recycling collection and processing would not be available to the communities of the Central Highlaads and Isaac Regional Councils. However the combined tonnages from all 4 Councils will not only meet the minimum tonnages required, they will exceed the minimum and reduce the overall cost to each council.

SECTION 6 - CONCLUSION

The councils of the Central Queensland region believe that undertaking the initiative to develop a regional waste and recyclables collection and processing contract is the only way forward in a viable manner that will provide a compelling and sustainable benefit to the public by:

A reduction of costs in providing waste and recyclable collection and processing; Diverting a significant amount of waste from landfills in the region; Providing best practice kerbside recycling to 4 regional councils - 2 of which have never had kerbside recycling before; Optimising service efficiencies through a collective service that is able to operate viably in a region where the majority of population bases are small and the distances between towns are considerable; Implementing the objectives and actions of the Central Queensland Waste Management Strategy; Conforming with the EPA Waste Management Policy and regulation; and, Supporting the structural reform agenda for local government that the Queensland government is currently implementing through the development of regional contracts.

The provision of waste services is a significant cost to Central Queensland communities particularly in light of the increasing costs of collection, disposal and processing and the regulatory constraints placed on local councils in relation to landfill management and waste diversion.

The councils h l y believe that in addition to the above, the participating councils have a number of similarities in the type of residential development and growth, infrastructure and demographics to support the successful development and implementation of a regional contract.

A regional contract for waste and recyclables collection and processing is the only way that these services can be efficiently and effectively provided to all communities across the region. The aggregation of tonnages provides the critical mass to attract a competitive market to be able to deliver the services required and in a cost effective manner for all parties.

This application is submitted on the basis that there are no impediments to this proposal and that the public benefit of this proposed conduct will far outweigh any anti competitive detriment that may be derived h m such action.

Accordingly, the authorisation of the Commission is sought for the councils to proceed to tender. A#achnrent 2 CQLGA Submission to the ACCC for Authoriralion Page 22 of 22

Central Queensland Local Government Association

Application for Authorisation t : ~ - ~ ~ ~ , ~ > , ~ - j ~ , ~ ; ~ ; j ~ * t , ',;::ari7,t-8.,, - ): ' 1 , i: -

- - 1. l . . , # ' to the

Australian Competition and Consumer Commission (ACCC)

Proposal to tender for Waste Collection and Recyclables Collection and Processing Services

Section 5 - Market DeflILition

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Attachment 3 CQJWA Submhsion to lfie ACCC for Aufhoriration Page I of 4

MARKET DEFINITION

Waste and Recycling Services in Central Queensland

In Central Queensland the waste and recycling services (collection and processing) are dominated by a small number of service providers that are prevalent at the State and National level in the waste industry.

There are no locally owned and operated waste service providers for domestic collection and processing. In collection services the Central Queensland market is dominated by JJ Richards, who have the current collection contracts for the former councils of Gladstone, Calliope, Emerald, Duaringa, Belyando, Broadsound, Nebo, and Peak Downs.

Once again, JJ Richards operate the only Materials Recovery Facility (MFR) currently operating in the region at Clermont (former Belyando Shire Council). The Clermont Materials Recovery Facility processes predominantly industrial recyclables from the Bowen Basin coal mines that are closely located to the town.

Up until February 2008, JJ Richards also operated a MRF at Gladstone servici~g the former Gladstone City and Calliope Shire Councils. The operation has been closed down by JJ Richards, and the new Gladstone Regional Council is trucking their recyclables uncompacted to Brisbane.

Rockhampton Regional Council currently runs its own domestic collection and processing services with its own day labour. The former Bauhinia Shire (now part of the Central Highlands Regional Council) has its own waste collection service running one truck and one driver.

There are some commercial services provided by waste contractors in the region. Where these services exist with councils there has been inclusion of them in the

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contract.

A key factor influencing the development of the Regional Waste and Recycling Collection and Processing contract revolves around 'competition for the market' by the councils in the Central Queensland region and the most effective way to compete for the market is to develop a regional contract that provides a larger contract catchment area and a greater number of combined collection and processing services to attract a range of competitors.

This is clearly demonstrated in the following two situations that provided the triggers for the development of this regional contract:

Six of the seven former councils in the Central Highlands and Isaac regions have current individual contracts with the same contractor. This has come about over a period of time, as a result of the individual councils going to tender and JJ Richards being the successful tenderer - usually because they have been either the only tender or the tenderer with the lowest price in a very small tender response.

Why the same contractor? Because they have been the only waste company that is prepared to service inland communities with small population bases.

Atlachment 3 CQLGA Submksion to the ACCC for Authoriralion Page 2 of 4

ii)

This service has come at a cost to the respective councils, as for each council contract there is at least one truck and there is w&lly only one or two day's work in collecting for each Shire (Emerald Shire Council being the exception). Consequently plant is underutilised and the councils are paying for this through their contracts. The provision of this service has been expensive for the inland councils in comparison to other councils in Central Queensland that are closer to the market concentration.

The aggregation of the 6 individual contracts into a regional contract will create more competition through the consolidation of the number of collection services, and the more efficient use of plant.

In 2007, the CQLGA facilitated an Expression of Interest (EOI) to build, own, and operate a Regional Materials Recovery Facility (MRF) for the now Gladstone Regional Council (formerly Gladstone City, Calliope and Miriam Vale Shire Councils) and Rockhampton Regional Council (formerly Rockhampton City, Livingstone, Fitzroy and Mount Morgan Shire Councils).

Five Expressions of Interest were received and a consistent message fiom all the applicants was that 8,000 tonnes was the minimum requirement to commercially operate a viable MRF. By ~ s e l v e s , none of the councils could supply this minimum required tonnage. However, collectively the tonnages of each of the councils would exceed the minimum required and create some real savings for the councils as the MRF gate prices provided in the EOI were based on a sliding scale - the more tomes over the minimum requirement would mean a cheaper rate for the councils.

Barriers to entry into the Central Queensland waste and recycling collection and processing services for contractors include:

The cost of equipment for w e in the collection, transfer and disposal of waste in relation to distance from market concentration and number of collection services over a given area;

The critical mass of recyclables required (tonnages) to ensure the viable operation of recyclables processing infrastructure.

Market Sounding

The CQLGA engaged Local Government Infrastructure Services Pty Ltd (LGIS) to provide technical advice and to conduct a market sounding for the development of the contract. The purpose of the market sounding was to gather feedback Erom the waste service industry providers to help:

gauge the level of market interest and capability; understand the market's preferences regarding tendering processes and contractual arrangements; engage the market efficiently, either individually or together; understand the market's view of the compatibility of services and the potential to include them in amalgamated contracts; and, identify and address issues of potential market participants

Attachment 3 CQLGA Subdsion lo the ACCC for Authorbation Page 3 of 4

Twelve companies were interviewed and the following table provides a list of companies interviewed.

Value of the Contracts in relation to State and National Market

-. - - - - -- -- - - - - -

Company -. - -. - - -- --

J.J. Richards and Sons -

Cleanaway - -

Sita - CEC

Thiess Services - Allied Environmental

I - - - -- -- - - - - - -

Veolia

Wanless Wastecorp

Rernondis ---

Recycling Design and Technologies

Australian Bale Press I Visy Recycling -- Arncor ---- - - - - - -

Estimated value of both contracts is $30 million over 10 years ($10 million for the -MRF contract and $20 million for the CH Joint Waste Collection contract). It needs to be noted that there are no locally owned waste contractors in CQ and that the waste industry in Australia is generally national and internationally orientated.

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Attachment 3 CQLGA Submission & the ACCC for Authorisation Page 4 of 4