Higher costs from waste services: Councils end up paying twice for employee entitlements

Gunnedah Shire Council is joining a chorus of concern about changes to the tendering process for waste services personnel that could see ratepayers slugged twice the cost for employee entitlements.

In a mayoral minute delivered to council, Gunnedah shire mayor Jamie Chaffey said amendments by the NSW government to the Local Government (General) Regulation 2021 will place Gunnedah council at great financial disadvantage.

The amendments now require that when council wishes to change service providers, the new service provider must offer the employees of the existing service provider a job on at least the same terms and conditions of employment with continuity of service and no loss of entitlements, regardless of whether the new provider requires the employees to deliver the service.

There is no requirement for the existing service provider to compensate the new service provider (or the council) for the cost of accrued entitlements that will become a liability for the new service provider.

Cr Chaffey said this effectively means councils end up paying twice for accrued employee entitlements.

The mayor was particularly aggrieved by the lack of discussion about the proposed changes prior to the amendments being legislated just weeks before Christmas last year.

“It was quite disappointing there was very little consultation,” he said.

“There will be high potential for considerable cost increase for waste services when we go back to tender.”

It is not the just financial impact that is of concern, council is also worried the amendments will significantly hinder competition in the tender process for waste services and heavily favour incumbent service providers.

“[The amendments] will drive down the take up of circular solutions to waste management and resource recovery because of the higher labour costs. The amendments will also advantage existing contractors who are already carrying the employees and entitlements on their books, which will create an unfair advantage for existing suppliers,” council’s business paper stated.

Fellow Gunnedah councillor Juliana McArthur also expressed concern about the changes.

“It shows serious overreach by the [NSW] government,” she told fellow councillors.

“Councils cannot afford the cost and the administrative burden and we need to increase competition in Australia not limit it.”

Their comments were backed by legal advice sought by Local Government NSW (LGNSW).

LGNSW referenced analysis by senior counsel Arthur Moses who highlighted many problems including that “the amended regulations are ambiguous, unworkable and apt to produce adverse consequences for councils, tenderers, employees, ratepayers, and the general public… ”

Gunnedah councillors resolved to write to the NSW government to reverse the amendments as a matter of urgency.

NSW Minister for Local Government Ron Hoenig said there are numerous examples of waste management contracts changing between service providers, and workers are offered an identical role with the new contractor but with lower pay and loss of entitlements.

“These changes will prevent waste contractors from undercutting during tenders and winning contracts on the basis of paying workers less if their employer changes,” he said.