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Why the deposit return scheme may end up increasing your bin charges

Bin companies mull putting up prices as consumers stop putting bottles and cans into green bins

Bin lorry: the waste collection companies are looking to impose higher charges to account for losses under the deposit return scheme. Photograph: iStock

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John McManus
Wed Jul 3 2024 - 10:45

Whatever else the Government hoped to achieve with the introduction of a deposit return scheme for plastic bottles and aluminium cans, it probably didn’t intend to shine a light on the murky world of domestic waste collection.

The Irish Waste Management Association – which represents the bin companies – cried foul this week claiming that they were losing out on the valuable cans and plastic bottles that people used to put in their green bins. From a recycling perspective these are the most valuable items in your bin. It seems aluminium cans are worth €800 to €1400 a ton and plastic bottles €500 a ton.

The bin companies claim the deposit return scheme will cost them €15 million a year. Unsurprisingly they are talking about putting up their prices to recoup the money.

From a consumer perspective this is a perverse outcome.

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We previously had a situation where we put bottles and cans into our green bins and paid the bin company to take them away. There was an assumption that bin charges in some way reflected the money the bin companies made by processing and selling the contents of the green bins.

Since the introduction of the deposit return scheme in February there is now a cost for putting bottles and cans in the bins. You don’t get your deposit back. Most people understand the trade-off. The cost benefit of bringing to bottles and cans to the deposit return scheme machine does not add up for everyone.

‘Waste management is an intensely secretive industry. The big players are either unlimited companies or part of larger groups and figures for their bin collection business are not made public'

But what nobody told us – or I suspect can understand – is that regardless of whether you use the deposit return scheme or not you are going to have to pay more to get your bins collected lest the bin companies’ profits suffer.

The assumption on the part of the bin companies that they should be insulated from the negative consequences of the deposit return scheme speaks volumes about the way the multimillion euro industry operates.

It is worth noting that the industry originally sought to be allowed to claim back the deposits on bottles and cans put into green bins. There was no suggestion that this would result in lower bin charges.

[ Deposit return scheme: More than 200m containers processed since February start ]

Waste management is an intensely secretive industry. The big players are either unlimited companies – and thus not required to disclose financial information – or part of larger groups and as a result figures for their bin collection business are not broken out and made public.

It is also a profoundly uncompetitive industry. A 2018 study by the Competition and Consumer Protection Commission found that the market was highly concentrated with just one or two operators in most locations. This gives the bin companies considerable power to push up prices and change terms whilst consumers are in a weak position to resist because of the lack of alternative options.

It is also an industry that tends towards monopoly. It is hard for new companies to break into the market and achieve the scale needed to be profitable. Instead, it leans towards consolidation with existing players merging and becoming more powerful.

“The ongoing consolidation in the market could mean that the remaining operators may have an unregulated monopoly position with possible adverse implications for household charges and service levels, and ultimately, consumers,” the report concluded.

‘The haphazard privatisation of the bin collection business has its origins in the attempt to impose municipal bin charges over 20 years ago’

What this means in practice is that the bin companies probably will be able to pass on any losses they incur because of the deposit return scheme to their customers. It is really only possible for the consumer to get shafted like this is an industry that lacks competition and is not regulated.

The CCPC recommended that an economic regulator be established to oversee the industry with the objective of ensuring competition and regulating prices. Any attempt to make customers pick up the tab for the deposit return scheme would presumably fall within a regulators remit if it existed.

The Government does not seem to be overly keen on the idea of a regulator for the industry and the reason is obvious. The haphazard privatisation of the bin collection business has its origins in the attempt to impose municipal bin charges more than 20 years ago. The charges were opposed in Dublin by local activists and a number of left-wing parties. It was a bruising affair with activists sent to jail and rubbish piling up on the streets in parts of Dublin after the authorities’ stopped collections.

The campaign may have launched the political careers of Joe Higgins and Clare Daly but it did not stop the charges. However, many local authorities subsequently privatised bin collection rather than deal with the political fallout from of pursuing constituents directly for payment. Best left alone seems to the view of many politicians.

But it is presumably open to the CCPC to look at the issue of the whether bin companies can pass on the costs of the DRS to their customers.

It would be a welcome but unintended consequence of the introduction of the deposit return scheme if it finally pushed the Government into properly regulating an industry that provides vital service to almost every household in the country.

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