Question for TaxAudit.ca: How much money is Waste Management charging the city for garbage pick-up?

Your trash hauler cost you nearly $1 million a year and the city is trying to renegotiate its contract, but who said the city couldn’t save money? A good question. The answer, of course, is no one – and certainly not the city’s private trash haulers.

Waste Management Inc. and Honest Ed’s refuse to shoulder the financial burden of the most costly affordable household trash pickup program in North America, Ontario and Alberta.

Just last week the city rescinded contract extensions provided to Waste Management because of waste price gouging. The city estimates that garbage prices will rise 5.2 per cent and 7.5 per cent for residential and commercial collection services, respectively. As reported by CBC, Canadian Union of Public Employees, an umbrella group for the city’s private trash haulers, disputes the figures. If it is true that the city is now hiking residential rubbish service prices by 7.5 per cent, the rate hike would amount to almost $111 million. That money will most likely go straight into public coffers.

Public scrutiny and fear of public backlash motivated the city to renegotiate this huge contract. Toronto city council, not flush with cash, balked at the $3.87 billion garbage contract with Waste Management. It agreed to renegotiate the deal this spring so it could control the scope of garbage collection over the next 15 years, particularly a proposed expansion of the northern portion of a landfill in Mississauga.

Private trash haulers simply cannot abide the city’s flagrant disregard for the reality of rising garbage prices in the last decade. So, they sought arbitration in Canada’s Residential Landfill Services Tribunal, where they held their own arbitration in a hearing that lasted five hours with only Toronto’s deputy mayor council member Norm Kelly from the city representing.

The result? A $1.6 million settlement for the private haulers, which should not have been happening given the astonishing cost of garbage collection.

An arbitration award can hardly be considered fair, reasonable or justified. The arbitrator determined that waste collection would rise $1.63 million per year, based on assessments of disposal costs and waste reduction activity and improvements to the commercial waste program. Two other garbage managers countered with a $2.1 million estimate based on actual cost data since the deal was renewed in 2014, according to the arbitrator’s decision released May 15.

While Waste Management paid a pittance, it was still still the better offer. Waste Management’s proposal would have cost $2.3 million a year more per year and would have been worth more in damages, at an estimated $4.2 million. For a city that argues waste trucks are an essential service, higher haulers numbers are absurd.

The arbitrator completely ignored dump land prices, including landfill waste disposal charges and electricity feed prices. The increased rate would have eliminated most residents’ garbage collection and required them to pay an additional $101.88 per year for their garbage service.

Besides savings over the contract renegotiation by Waste Management Inc., the city was already spending $103.88 per household a year for garbage pickup. Refurbishing the facility would have only added $18.58 per household a year. Trash haulers simply cannot abide the city’s flagrant disregard for the reality of rising garbage prices in the last decade.

Disregarding the reality of a predictable rise in waste haulers’ costs and garbage disposal costs, the city was willing to accept a garbage contract that will leave taxpayers on the hook for $1.6 million per year in landfill disposal costs. Once you look at what the arbitrator found, the arbitrator’s award should not have been needed.

Alexa Gratton is an associate professor at the Toronto School of Economics. She is the author of Taxable Waste: Canada’s Trouble With Recycling and Waste.

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