A consultant hired to review Stewardship Ontario’s new payment plan for hazardous-waste recycling says he couldn’t do his job because his requests for more specific data from the agency were denied.
The not-for-profit agency is facing criticism over its decision to take hazardous-waste contracts out of the hands of municipalities in favour of a more central model that some service providers say doesn’t pay enough to keep them in the market.
At least two hazardous-waste transporters have already announced they will pull their services, a decision that could leave some jurisdictions including Toronto, Peel and Niagara Regions without collection of paint for recycling in less than two weeks.
Stewardship Ontario has defended the price change, saying it strikes the right balance between fostering more competition in the industry and maintaining services across the province.
But an attempt by an independent consultant to find out how the agency arrived at the new prices failed. The report by consultant Andrew Keir, from AECOM Canada Ltd., was released to Stewardship Ontario and the Ontario Waste Management Association. The OWMA represents service providers.
The report indicates that Stewardship Ontario declined to share details of its pricing model, even after the consultant offered to sign a confidentiality agreement.
“Stewardship Ontario believes the model is correct,” states the report, which was commissioned by the OWMA. “Unless there is an opportunity to look at the model there can be no verification of underlying assumptions and calculations.”
The situation has left service providers in the dark about whether their businesses will remain profitable, said Rob Cook, CEO of the OWMA.
“We can’t resolve this until we understand the model,” he said. “Until someone is able to fully understand and assess how Stewardship Ontario created this, I don’t see how we’re going to find a resolution.”
Mr. Cook said the agency is concerned the new prices aren’t high enough to account for the realities of the business and were developed with limited consultation. He said Stewardship Ontario initially agreed to the independent review but didn’t co-operate with the consultant once he began his work.
Stewardship Ontario disputed that suggestion. “We went above and beyond in our openness in providing as much information as we could,” Stewardship Ontario spokeswoman Rula Sharkawi wrote in an e-mail, adding the only data that were withheld contained commercially sensitive information.
The agency, governed by a provincially mandated body to oversee recycling of hazardous materials in Ontario, collects fees from manufacturers and retailers of recycled goods. It uses the fees to fund household recycling programs in Ontario. Until January, 2012, municipalities entered into tendered contracts with companies to haul and recycle hazardous materials, then submitted their bills to the agency.
Under the new payment structure, Stewardship Ontario is giving industry suppliers fixed “incentive payments” based on the amount and the type of waste they handle.
The consultant’s report suggests that the changes will have far-reaching effects on businesses that collect and recycle hazardous materials in the province.
“[Stewardship Ontario]maintains they are not looking to change the nature of the marketplace. However, inadvertently or directly this will not be the case,” the report states. “These financial changes will force some if not all service providers to change their business models if they want to remain in business.”
The agency says that if businesses are displaced, it will be because they were unable to adapt to the new, “cost-effective” environment the changes are creating.
“It is not surprising that those that have benefited from traditional contracts and have dominated large parts of the market are upset when we open up the marketplace to increased competition,” Ms. Sharkawi said.
The OWMA said it believes the switch to a new pricing model could have worked – but only if the prices Stewardship Ontario set reflected the true cost of the business.
Mr. Cook said he had hoped the consultant’s review would allow service providers to understand how Stewardship Ontario had come up with the numbers.
“Without that third-party study, there’s no common ground for us,” he said.
Editor's Note: Stewardship Ontario is a not-for-profit corporation overseen by provincially mandated Waste Diversion Ontario. A previous version of this article incorrectly referred to it as an agency of the government. This version has been corrected.
With additional reporting by Sean Silcoff in Ottawa