Shock waste cost rise was the last thing PSD needed

PASSIONS are running very high again over the waste strategy.

It is the debate that will never die – and now the department leading the latest vision is at the heart of controversy over the costings used.

Back in February 2012, nearing the end of the last term of government, Public Services rushed through its new plan based on very high levels of recycling and exporting any residual.

It wanted to make sure it was the last States to make the decision, having earlier in the term rejected the Suez incinerator the department had previously put forward.

In the haste to get the report out, many of the costings were left at an indicative level.

The trouble is that those costings have now increased more than sevenfold and instead of promoting how it will implement its plan, it is firefighting.

On the one hand, the new Public Services minister, Paul Luxon, and his board are saying that the costs have risen in proportion across all the options, leaving its preferred choice still the cheapest – even at £20m.-plus more.

In the other corner are critics led by former board member Deputy Tony Spruce, who believes that the figures presented were a disgrace and the department should now present properly tendered proposals.

In the region of £12m. has already been burnt on aborted waste plans over the last decade, which does not include the thousands of hours of civil service and consultants' time.

Deputy Luxon would like to focus on the positives, but he is also keen to defend his department from any suggestion it deliberately misled the States.

If there were any misunderstandings, Deputy Luxon said, it was he as minister that was to blame for not getting the message across.

Those efforts have included briefings for States members, douzaines, the media and the parish bin men on its implementation plan and what had been done since the debate.

'That was the beginning of my board's desire to open up all the waste strategy implementation to the whole island. We don't want it to be a secret, we know 63,000 people have to be part of the solution,' he said.

It also included what must have been the longest period any minister has been on the spot during question time – in the States last Wednesday, it was well over an hour.

But in all that, it was the capital cost escalation that raised alarm.

Deputy Luxon remains grateful to Deputy Spruce for asking the questions, so giving him an opportunity to go public with the cost differences.

The department had already tried to explain to the Treasury and Resources Department and Policy Council what had happened. There had not been time, he said, to prepare a States report for debate.

'I don't think all the difficulties with the waste strategy are about rubbish, it's about change,' said Deputy Luxon. 'We have to change our outlook dealing with our waste going forward. We can't keep putting into a hole in the ground black bags that have been whisked away in the night, leaving it for future generations to deal with.'

By the end of March, all departments had to tell Treasury and Resources what capital projects they would like to bring forward between 2014 and 2017.

It was during this process that more detailed costings were worked on for the waste strategy.

Deputy Luxon's department's submission also covers the harbours, airport, States Works, Guernsey Water and roads and he described it as one of the best pieces of work it has produced so far this term. During this process, he said, it became clearer what the department did and did not want within the waste strategy.

It is aiming to put in a 'successful, efficient, cost-effective waste system' – it is a phrase Deputy Luxon repeats often.

'I and my board remain determined that the costs of implementation of this strategy will be as minimal as possible without cutting corners. We don't want to see gold-plated solutions, we want a good, proportionate, Guernsey-based solution. Cost is very much in front of our minds.'

Deputy Luxon campaigned against the Suez plant, which would have cost some quarter of a billion pounds over the next 25 years plus multimillion-pound decommissioning costs that were never included in the original proposals.

Deputy Luxon believes firmly Guernsey would have been left with an incinerator that would have been far too big for its needs.

In 2001, the island produced 70,000 tonnes of waste – that is down to 33,000.

By the end of the new waste strategy, with 75% recycling, it aims to get this down to around 17,000 tonnnes.

'What would be more barmy than to build an £80m. incinerator with the capacity for today's volume when we're determined to reduce the volume?'

Deputy Luxon argues that across Europe there is now significant spare capacity in incinerators and jurisdictions buy into the waste reduction philosophy being followed here.

It is this which means the cost of export for Guernsey has fallen dramatically, more than enough to cover the £20m. increase in capital costs – although the department will not confirm what the new export cost is, expect the gate fee to be around £50 a tonne, then add to that shipping costs and baling facilities.

This, Deputy Luxon stresses, is a benefit year after year.

Just how much spare capacity is out there is demonstrated by reports that Sweden now plans to import 800,000 tonnes of rubbish to fuel its waste-to-energy plants.

The strategy, he argued, is sound.

The department wrote a long letter to Treasury to explain the escalation in capital costs.

Those for kerbside collections, a materials recovery facility, in-vessel composting and site works at Longue Hougue were not fully costed last term because there simply was not time, he said.

A waste consultant reviewed the figures and modelling and agreed that because those on which detailed work had not been done were common between all the options it would not make a difference to the choice, he said.

Figures have been revisited to include a Guernsey inflation factor and an optimism bias used for complex technical projects to give a contingency.

The £24m. is likely to be revised down.

Bin men have now come forward with alternative suggestions for the kerbside collection at no capital cost to the States, for which PSD had budgeted £1.3m. for new vehicles.

The department is also in talks with local waste contractors about the materials recovery facility.

Deputy Luxon is convinced the decision made in 2012 would have been the same even with the revised costs.

Whatever solution backed was always going to be more expensive than landfill.

Because the funding is on a user pays principle, the extra money needed for capital will not impact on other capital projects such as schools.

It will be funded by a loan, either from Treasury or perhaps from the private sector, where better interest rates could be available.

Deputy Luxon is confident there is enough money in the States cash pool that the loan would not impact on any other internal loan plans, such as those spoken about before for Guernsey Electricity.

Public Services has promised to implement the new waste strategy by the end of 2015.

It is now facing the first test of this term – will deputies remain confident it is the right way forward?

A big test will come later this week in briefings to States members about the cost rise.

But that is unlikely to be the end – the reality is that change is coming.

Whether it is higher bills, people having to separate waste in their houses, the potential of financial penalties or the reality of what the facilities look like at Longue Hougue, there is much on which the department still needs to convince – the shock increase in capital costs is a hurdle it could have done without.