The City of Toronto has not received reimbursement for more than $20 million in waste-hauling costs since 2014, says a new report. The report also says, if the city followed up on the mandate to re-negotiate its waste-hauling deals, it could save taxpayers another $17 million.
The report, authored by W. Michael Papapetrou, a professor at the University of Toronto’s school of public health, found that the city has consistently received less than the profit margin it expected under its privatization. Toronto currently has more than 350 private waste handlers, who collect and dispose of more than 60 percent of the city’s waste.
“This is just an indictment of the private sector,” Papapetrou told The Globe and Mail. “They don’t account for one cent of your tipping fees [stamps] or landfill charges, but they do have a lot of control over the profit, including de facto monopoly over new development.”
Papapetrou said that the city wasn’t transparent about its privatization contracts. He also cited $21 million in disputed payments, and noted that the city found no funds to purchase land for a new landfill, while the private sector negotiated a higher deposit for the land. Papapetrou said there’s no good reason for private haulers to be better than the city, given that we have similar waste disposal standards, like biodegradable bags, and it just doesn’t make financial sense.
Business consultant Brian McConnell has been closely following the privatization of Toronto’s waste-disposal services for more than 15 years, and says the city was billed for waste hauled by private companies, but did not return.
“There’s a whole lot of challenges with this,” McConnell said. “It’s a money loser for the city.”
McConnell thinks the city might be better off handling the garbage itself, and said that more than 30 other cities, such as Austin, Boston, and L.A., are working on similar privatization experiments. He pointed to Tulsa, Oklahoma as a city that has had success, given that it has over 30 recycling and composting programs.
“Doing a pilot project like this is the way to go,” McConnell said. “It’s cost-effective in that it saves a lot of cash every year.”
City-owned waste management is another of the city’s major infrastructure issues, as the Toronto Public Library finds itself buried in debt.
“The concern with services like this is that when you privatize it, there’s not a lot of transparency around the process and the questions that you need to answer,” McConnell said. “I guess a short answer would be no, it could be done.”
For now, private haulers control billions of dollars worth of Toronto’s garbage. Now the city can move forward with tearing down its municipal landfill and buying land, which could cost between $1 billion and $1.5 billion.
However, Papapetrou argues, Toronto should have insisted on renegotiating its waste contracts before privatization.
“What should have happened is that these were going to be renegotiated on a more thorough front than what has happened,” Papapetrou said. “We should have known going in that these were going to be onerous contracts and go poorly.”