Bin charges debacle: Why were once public services in Dublin sold off to private companies?

Company criticised for planned fee hikes won business from two local authorities due to privatisation

The bin fiasco of the last week has again focused attention on the privatisation of waste collection services.

Minister Simon Coveney confirmed today that current collection rates will be frozen for 12 months as part of a deal drawn up with private waste operators following backlash over mooted fee hikes. 

Among the companies that had planned to increase charges from the start of next month was none other than the operator that took over most service routes from two Dublin councils six years ago.

Back in 2011, Dublin City Council was losing millions a year on refuse collection, mostly through unpaid rates.

Officials decided to follow the lead of the three Dublin local authorities by exiting the market and transferring business to the private sector. 

After 150 years of publicly-provided services in the city centre, Greyhound took control of collecting green, brown and grey bins from the council’s 140,000 customers in January 2012.

The transfer had been recommended by management consultancy firm Ernst and Young, which was reported to have been paid €250,000 to choose a preferred bidder.

Under the agreement, Greyhound committed to keeping charges at existing levels for six months, at which point it was allowed to cover a landfill levy increase with a fee hike.

Waivers for low-income households in the area would also remain in force throughout 2012, it was agreed.

The two parties did not enter into a contract for specific period, though. Instead, Greyhound was handed the names, addresses and bins of the council’s customers.

The deal was the second struck by the Clondalkin-based operator in a year, having purchased South Dublin County Council’s collection services for 70,000 customers in April 2011.

As part of that arrangement, Greyhound committed to providing a service to households qualifying for a waiver on charges for 12 months.

Panda Waste, meanwhile, won much of the collection business from Dún Laoghaire-Rathdown and Fingal County Council when they privatised their services.

However, it was Dublin City Council’s sale that attracted the most controversy, as it allowed Greyhound to collect outstanding customer debts on the council's behalf.

It was this part of the agreement that became subject to a probe by the Data Protection Commissioner, which went on to clear the way for customer data to be passed on to the company.

Greyhound is now one of several licensed waste operators battling for customers in a competitive Dublin market.

Independent TD Joan Collins claimed in the Dáil last week that the industry is running a price-fixing “cartel” to keep prices high across the capital.

The Competition and Consumer Protection Commission told Newstalk.com, however, that it was "not aware of evidence of a breach of competition legislation" in the sector. 

Control of the industry

Whatever the case, questions will continue to be asked about whether such companies really need to raise prices. 

Greyhound, for example, had told some customers its service fees would increase from €59.95 to €169 a year when the new “pay-by-weight” system comes into effect from July 1st.

The company had been expected to also charge 35 cents per kilo of black bin waste and 23 cents per kilo of brown bin waste - more than triple the minimum mandatory recommended under the new charging regime.

Its profits have been shielded from public attention since 2010, when it adopted unlimited liability status, meaning its accounts do not have to be disclosed.

Another Dublin competitor, Thorntons, had indicated service charges would rise from €50 to €104, with similar rates to Greyhound for black and grey bin waste.

Both companies have since agreed to freeze prices until July 2017. 

But the debacle more broadly demonstrates the need for local authorities to retake control of the industry, according to People before Profit TD Bríd Smith, a long-standing campaigner against bin charges.

Her argument is that profit-driven private companies are more concerned about maintaining high levels of revenue than safeguarding services.

“Popular people-power campaigns have led to the remunicipalisation of water in a number of European cities. These things can be achieved when you have political will," she told Newstalk.com.

Fianna Fáil’s Mary Fitzpatrick, a decade-long member of Dublin City Council, told this website that she thought the privatisation of waste services was a mistake on the part of local authorities.

Ms Fitzpatrick said her main concern was the number of low-income households ultimately left without a waiver for bin charges.

Dublin City Council could have protected such exemptions if it had awarded a contract to Greyhound, rather than sell its assets, she said.

However, Ms Fitzpatrick added that it was unclear whether the council could afford to take over the running of services.

That view was reiterated by Fine Gael councillor Ray McAdam, who said he was “not convinced” that the local authority would be in a position to move back into the market because of costs.

Dublin City Council said in a statement that it exited the waste collection business "on the basis that under the circumstances prevailing at the time, it was economically unsustainable to remain in the business. This remains our position."  

South Dublin County Council told Newstalk.com it had no comment to make on "speculative positions regarding waste services being returned to the control of local authorities".  

Greyhound, Thorntons, Panda and the two other Dublin councils did not respond to requests for comment.