Nov 8, 2021
In 2016 Mayor John Tory pushed a Scarborough homeowner’s blue bin to a snowy curb, promising that the city of Toronto waste collectors picking it up would soon be replaced by cheaper private-sector workers.
“The city is saving millions of dollars contracting out garbage in the west end of the city,” Tory declared as news cameras snapped. “We need to get the same savings and level of service for residents in the rest of Toronto.”
Those claims will be up for debate this week when city council votes on a proposal to return the Etobicoke collection contract to Vaughan-based GFL Environmental in 2023, after eight years with Miller Waste Systems. A new city report gives rise to figures that suggest the cost savings of privatized trash collection have melted like the Scarborough snow.
Tory was first elected mayor in 2014 vowing to privatize all waste collection east of Yonge Street, following privatization in preamalgamation Etobicoke and later, under Tory’s predecessor Rob Ford, the remainder of the city’s west side.
Tory kept pushing but never convinced a majority of city councillors to back full-city privatization, eventually settling for the current public-private mix, which may have been for the best.
Collection of garbage, recycling and food waste east of Yonge by city workers is now pegged as slightly cheaper per household than the private west-side collection that was once touted as saving Toronto taxpayers $11 million per year.
The city’s current budget for in-house collection is about $33 million per year for 237,000 households east of Yonge, or $139.24 per home.
The budget for the two contracted-out districts also totals about $33 million — an average of $143.48 for each of the roughly 230,000 households.
City staff say you can’t make exact city-private cost comparisons because different factors go into the calculations. But they don’t dispute that past trumpeted savings of millions of dollars for west-side pickup no longer exist.
The cost change has a left-leaning councillor calling for city staff to look at in-sourcing some west-end collection — having city staff take over routes now done privately — and a privatization booster on council questioning the city figures, as do officials with some waste collection firms.
So what trashed the private haulers’ cost advantage?
Executives interviewed by the Star cited their rising costs for fuel and trucks, and to hire and retain increasingly scarce drivers, some of whom get qualified and then jump to the city for premium pay and benefits.
Costs are a “moving target” for firms bidding on fixed municipal contracts that go many years into the future, said Miller Waste vice-president Denis Goulet.
“We were really hoping to keep this (Etobicoke) contract, but it has to be at a price that covers our costs and generates an acceptable margin level,” he said, noting the contract — five years with an option of two more — gives a shorter window to recoup truck costs than traditional contracts of seven years or more.
Miller’s offered price would have seen the city’s per-household collection costs jump above its current contract. GFL won with a bid less than half of Miller’s, keeping city costs comparable to now.
In an email exchange, Patrick Dovigi, GFL founder and chief executive, said he doesn’t know what the city of Toronto includes in its in-house collection costs but he believes his firm still offers a “significant” cost advantage.
While private costs have gone up, the city has got more efficient, says Toronto’s manager of solid waste, arguing the city split has helped make in-house collection more cost-effective.
“An exact comparison cannot be made between what contracted waste collection and what in-house waste collection costs the city as they are based on different cost drivers,” Matt Keliher said in an email.
Having half the city private and half public “allowed for some in-house efficiencies to take place, such as a reduction in the number of vehicles (capital replacement costs and maintenance) as well as the consolidation of a number of yards.”
Also, city trucks with bin-hoisting arms meant less workers per truck and reduced injuries and Workplace Safety and Insurance Board claims.
“Over time, savings have also been realized through harmonization of job classifications, attrition, reduction in vehicle maintenance costs by shortening the vehicle lifespan, and reductions in overtime costs.”
Coun. Mike Layton said city council was proved right in resisting pressure to outsource collection in Scarborough or all of east Toronto, amid fears waste haulers would raise prices after the city no longer had its own trucks to compete.
“I think private operators would be taking advantage of us and driving up the cost,” said Layton (Ward 11 University Rosedale). “It would be costing us more than it is now and we would have worse service as a result.”
He wants city staff to consider in-sourcing some west-side collection.
Coun. Denzil Minnan-Wong, who helped lead the charge under Ford to privatize collection from the Humber River to Yonge, questioned if city collection is really as cost-effective as private, arguing strenuously against the notion of in-sourcing.
“The private sector still keeps the public sector on their toes in terms of both cost and efficiency, so taxpayers win and that’s why you need continued involvement by the private sector,” said Minnan-Wong (Ward 16 Don Valley East).
“In terms of driving efficiencies, the private sector has forced the public sector to up their game.”
The new numbers aren’t the first time city staff have suggested private collection isn’t a huge cost-saver. In 2015, a city staff report argued against contracting out Scarborough service, saying there would likely be no savings for taxpayers.
Tory at the time said the report left many “unanswered questions.” The solid waste manager soon left her post, replaced by one who oversaw a new report suggesting another look at Scarborough privatization.
But without majority council support, the proposal was shelved.
Tory now supports the public-private mix. “Millions of dollars has been saved over the years because of this competition but also because the city is driving efficiencies,” said his spokesperson Don Peat.
“Mayor Tory has always been clear that he would approach this issue based on the facts not political ideology from either side. The mayor won’t blindly support contracting in or contracting out and he’s confident that the vast majority of the public would agree with that responsible approach.”
Toronto Environmental Alliance wants city council to look beyond cost alone and consider private haulers’ performance ensuring recyclables are diverted out of the waste stream, which is good for the environment and for reducing landfill costs.
TEA’s Emily Alfred noted past city reports have pegged diversion rates for city collection as higher than in the privatized side of Toronto. Layton said he has seen private collectors on his street contaminate recyclables with other waste.
Another factor is set to complicate Toronto’s waste collection landscape.
Starting in July 2023, the city will be among the first in Ontario to see responsibility for blue bin collection taken over by waste producers under the province’s “extended producer responsibility” program.
Nobody knows, at the moment, if private or public workers, or a mix of the two, will take over recyclable collection, but it could save the city millions of dollars.
“Even though the regulation has been finalized, there are still a lot of unknowns,” the city’s Keliher said, “including what the overall system will look like, what the city’s role (if any) will be in the transition years (2023 to 2025) and beyond (2026 onwards) and the resulting impacts to the solid waste management services rate structure, city staff and residents.”
This article was reposted from Toronto Star Newspapers Limited. https://www.thestar.com/news/city_hall/2021/11/08/private-trash-haulers-were-supposed-to-save-toronto-taxpayers-millions-rubbish-says-a-new-report.html?rf This article first appeared in the The Star, on Monday, Nov. 8, 2021.