86                                                   28 February 2017

City Development Committee

10 February 2017




File: (17/181)





Report no: CDC2017/1/1


Activity Review 11 - Solid Waste





Purpose of Report

1.         The purpose of this report is to provide an overview of the services provided by Council within the Solid Waste Activity, and to report on the current levels of achievement within the Activity.



It is recommended that the Committee:

(i)         notes the information contained in this report;

(ii)        notes that this review also meets the intent of section 17A of the Local Government Act 2002; and

(iii)       agrees that a full section 17A review should not be undertaken at present for the reasons outlined in the report.



2.         Activity Reports provide regular information about Council activities, so that activities can be analysed and their future direction considered.  They also address the requirements of section 17A of the Local Government Act 2002 (LGA) that regular reviews be undertaken of the cost-effectiveness of current arrangements for meeting the needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions.

High-level description of Activity

3.         The Solid Waste Activity encompasses a number of separate and distinct sub-activities.  These are:


Operating Landfills

Closed Landfills


Recycling Collection Contract

Refuse Collection Contract


Each of these will be described in more detail below:

Operating Landfills

4.   Until December 2012, Council had two operating landfills, Wainuiomata and Silverstream.  The closure of Wainuiomata on 31 December 2012 was largely driven by the Government’s introduction of the Emissions Trading Scheme which is discussed in more detail below.

5.   Silverstream Landfill is therefore Council’s only operating landfill.  What is now known as Stage 1 of the Landfill opened in 1972, jointly funded by both Hutt City and Upper Hutt City Councils.  Stage 1 operated until 2008, by which time it had reached its design height and was closed.

6.   In preparation for this closure Council had submitted a Resource Consent application for new landfill (known as Stage 2), on the same parcel of land designated for Landfill, but immediately down the valley from Stage 1. After several years of investigating, planning, design and consultation, a Consent was granted without the need for a Consent Hearing;  possibly the first time this has been achieved in New Zealand, and significantly aided by submissions in  support of the application of the residents’ group which had been part of the consultation process.  The landfill is state of the art, fully lined and is the only Class A landfill in the Wellington Region.

7.   Like most physical works undertaken in the Infrastructure Group, landfill operations are contracted out.  The incumbent is Waste Management Limited who was awarded the contract in 2012, with a term of up to 9 years.  While there have been changes in the landfill operating company over the years, senior landfill staff members have remained on site and form an extremely experienced team with strong links to and relationships with Council.  Since signing the contract in 2012, Waste Management has invested significantly in new plant designed to enhance the efficient operation of the landfill.

8.   Waste Management’s performance is monitored and directed by Tonkin and Taylor Limited, who are widely reported to be New Zealand’s premiere environmental engineering consultancy.  They are responsible for maintaining an up-to-date Landfill Management Plan and ensuring that Waste Management work to achieve the objectives of that plan.  They act as Engineer to the Contract and process all contract claims.  Tonkin and Taylor also operate under contract to Council, but given the depth of the intellectual property which they have, (and the lack of landfill engineering knowledge within Council), the contract is in the nature of a ‘long term relationship’.  It is peer reviewed from time to time to verify that Tonkin and Taylor continue to provide a quality service at good value for money;  an approach which has been endorsed by the Office of the Auditor General.

9.   In addition to the operational aspects of the landfill, there is an ongoing capital development programme.  Each year work is undertaken to develop further landfill space for filling;  effectively a “just in time” approach to landfill development which endeavours to spread capital spend, allowing it to be paid for  each year out of landfill profits rather than borrowings.  Tonkin and Taylor are employed to design these capital works, and act as Engineer to the contracts.  The current contract for the physical works associated with the capital development programme, was recently won by H.G. Leach & Company for a period of 5 years.

10. A degree of recycling is undertaken at the Landfill.  Council has a contract with Earthlink Limited;  details of which have been reported to the Policy Committee as part of the review of Activity 14.  Landfill staff members work in cooperation with Earthlink to promote recycling of various materials.  Metals recycling remains the province of the landfill contractor.  Net revenues from recycling are retained by the contractor in exchange for an equivalent reduction in the fixed fee contract charge.

11. A gas to electricity plant on site burns landfill gas to produce electricity.  Council sold its 7% shareholding in this venture in July 2012 and the 100% shareholder is now Pioneer Energy.  Pioneer provides all the capital to develop the well field, and to maintain and upgrade the plant as necessary.  Council benefits by having a gas collection system provided by Pioneer, thus providing odour control at no cost to Council.

12. In recent years the Government, via the Ministry for the Environment (MfE) has introduced financial instruments targeted at landfills as an avenue by which to promote environmental sustainability.  Two major initiatives are used:

(a)        The MfE levy of $10 per tonne.  For every tonne of product delivered to landfill, HCC collect and pay $10 to the MfE.  The fund so generated is used to promote environmental sustainability initiatives throughout the country.

(b)        The Emissions Trading Scheme.  For every tonne of product going to Landfill, Council has to buy (and subsequently surrender) 1.31 Emission Trading Units (ETUs) less an allowance for quantities of emissions captured and destroyed. Since the introduction of the scheme Council has been able to certify that we are eligible to claim the maximum quantity of gas collected and destroyed, allowed by the scheme (90%).  Despite a recent increase in the price of the ETU’s, Council financial liability has therefore been very low (c. $18,000 in the 2015 calendar year.)

13. Council, Tonkin and Taylor, Waste Management and residents of Stokes Valley have signed a Charter formally establishing a group which meets regularly to keep residents informed of developments at the landfill and to hear any residents’ concerns.  An excellent relationship has developed between all parties.


14. The table below shows trends in landfill commercial volumes and domestic vehicle numbers, and movements in landfill charges.  These variables are the primary drivers of total revenue and net profit which are shown later in this report.






Commercial Volume

000’s tonnes





Vehicle Numbers






Tonnage Rate inc.

GST and MfE





Trailer Charge






15. The general pricing strategy adopted at the Landfill is to maintain relativity to other landfills in the region, recognizing that this is a competitive market. As shown in the table above, commercial volumes are currently around 100 kilotonne (kt).  The top ten customers deliver approximately 90% of the commercial volume, and Waste Management accounts for the greatest majority of that.

16. Wellington City Council’s tonnage rate is $121.80 and Porirua’s is $129.  WCC charges all cars and trailers by weight, PCC charges $38 for a trailer.

Closed Landfills

17. Closed landfills exist in the city, at Silverstream (Stage 1), Wainuiomata, Eastbourne, Wingate, Maungaraki and Korokoro.  These continue to be managed and monitored by Council.  A significant balance sheet provision exists such that all costs incurred are netted out to this provision.   Annual costs in previous years have been minor (<$50KPA), but are becoming more significant with the recent closures of Wainuiomata and Silverstream (Stage 1).  Typical expenditures are for trade waste charges, ongoing monitoring, mowing and vegetation control, and any remedial works required.


18. The land review project identified in 2009 a parcel of land on Wainuiomata’s Coast Road which could be surplus to Council requirements.  It was valued at approximately $100,000 less legal costs.  Officers identified that the land may be of more value as a Cleanfill and a Resource Consent was applied for and granted.  After a period of time in which the cleanfill was managed by Council, this operation has now been contracted out, with the Contractor paying to Council a monthly fixed rental, plus a further contribution of $4.60/m3 on monthly volume above a set figure.  Net profits have been steadily increasing, and are forecast at $75,000 for the current year. The current consent for this activity expires this year and an application to extend the consent term has been lodged with Hutt City Council and is currently being considered.


Recycling Collection Contract

19. This contract is currently held by Waste Management at an annual budgeted cost of $1.3M.  Collections are provided once a week and the contract is funded by way of a targeted rate of $37 per household.  Recycling bins are sold to households as required at cost, being around $15.  Collected material, largely paper, plastic, and glass, is taken to the contractor’s processing facility for sorting, packing and on sale – mostly to overseas markets.

Refuse Collection Contract

20. This contract is also held by Waste Management at a currently budgeted annual cost of $620,000.  This cost and associated fixed costs are recovered by way of sales of refuse bags.   Bag sale numbers declined steadily as customers move to commercially supplied wheelie bins but have recently stabilised.  Bag prices are set to recover costs and to maintain relativity with neighbouring Council prices.  The table below shows trends in bag sale numbers, total revenue and net profit for the cost centre.



Refuse Collection










Bag Sales Numbers 000s






Total Revenue






Nett Profit








Other Councils also sell refuse bags, price comparisons are as follows:  HCC $2.50, UHCC $3.50, PCC $2.50, and WCC $2.50.

Links between Activity 11 and Community Goals

21. Solid Waste management is essential for the health and quality of life of the community, the local economy, and the environment.  The Activity contributes most significantly to the following Community Goals:








Community Goal                       How Activity 11 Contributes

A Healthy Natural Environment





Healthy People


A Strong and Diverse Economy

We value and protect the natural environment and promote a sustainable city.  Resources are used efficiently and there is minimal waste and pollution


We live healthy lives, and our City’s services help to protect our health and environment

A City that grows existing businesses and attracts new business activity, with a focus on the research and development sector

All members of our community benefit from a strong economy, and we attract increasing numbers of visitors

By providing an environmentally responsible facility for the disposal of residual refuse and by providing  an efficient weekly service whereby residents can easily dispose  of refuse, and recyclables, the Activity helps protect the environment and supports personal health



By providing an efficient, cost effective and competitive residual disposal facility, the Activity facilitates business growth and development

Summary of Related Strategies and Policies

22. Key documents involved in the Activity are the Contracts which are in place as described above, the Landfill Management Plan, and the Landfill Long Term Capital Development Plan.  These documents spell out an expectation of performance of the contracts involved, set the scene for future operations, and ensure the achievement of Key Performance Indicators for the Activity as set out in Council’s Long Term Plan (LTP).  The Activity is also a key element within Council’s Environment Sustainability Strategy, although responsibility for delivery of the various waste minimisation targets therein rests with Council’s Environment Team.

Environmental Factors

23.     There are three main areas of potential environment impact or concern relating to the activity, being:


Litter concerns associated with refuse and recycling activities

Discharges to air and land from landfill operations, and

The Emissions Trading Scheme.


24.  Refuse and recycling collection contracts include a requirement for the contractor to remove any roadside litter.  This can be a challenge on windy days, but audits of contractor performance generally show scores above 85% for recycling, and 90% for refuse collection, while the RFS System typically records only one to two complaints per week.

       Trials of net covers on recycling bins have met with limited success.  Regular “educational” advertising encourages residents to pack their recycling securely and/or use plastic bags to contain lighter materials.

25.  Discharges to land and air for landfill operations are controlled by Resource Consent Conditions.  In effect we are talking about odour issues, and potential contamination of ground water.  Landfill operations are carefully designed to separate clean stormwater from potentially contaminated water.  Stormwater run-off from surrounding hills is collected in perimeter drains and channelled to a large holding pond where sediments settle out, before releasing into Tip Stream and the Hutt River.

       Run-off from operating areas of the landfill is allowed to filter through the landfill to be collected in leachate drains which are connected to Council’s wastewater network.

       Regular monitoring of groundwater via bores above and below the Landfill, and of water quality in Tip Stream, confirms no contamination of these water sources.

       Odour complaints from the landfill do occur occasionally as a result of particular operating circumstances, particular weather conditions, or a combination of both.  No odour complaints have resulted in any “breach of consent” notifications from Greater Wellington Regional Council in the last 10 years.

26.  The Emissions Trading Scheme provides a financial incentive for Council to ensure that good gas capture and destruction methodologies are in place.  While current penalty costs are not particularly significant, ETU market prices are beyond Council control.

Service Level Performance

27. The table below shows the Activity 11 performance measures as set out in Council’s LTP, and recent performance.



ACHIEVED  2012-13

ACHIEVED  2013-14

ACHIEVED 2014-15


ACHIEVED  2015-16


Residents’ satisfaction with:

rubbish collection

93% of those expressing          an opinion

refuse disposal

91% of those expressing  an opinion






















NRB Communitrak Survey

No resource consent-related infringement notices received from GWRC

100% compliance

100% compliance

100% compliance

100% compliance


100% compliance

Compliance Reports from GWRC

Note: Survey percentages quoted exclude those who responded ‘don’t know’. The definition of “peer average” is included in the Appendices to this Annual Report. 





ACHIEVED 2012-13

ACHIEVED 2013-14

ACHIEVED 2014-15

PEER AVERAGE 2015 - 16

ACHIEVED 2015-16


Residents’ satisfaction  with:

•  litter control

•  recycling

≥ 86% of those expressing an   opinion


















NRB Communitrak Survey

Note: Survey percentages quoted exclude those who responded ‘don’t know’. The definition of “peer average” is included in the Appendices to this Annual Report. 





Financial Overview

28. Activity 11.  Solid Waste accounts for approximately 5% of all Council expenditure equating to approximately $8M in the year ending 30 June 2016.


29. Financial History for Activity 11 is shown in the following table.































User Charges







Other Revenue




























Operating Costs







Finance Cost


















































Impact of Increasing/Decreasing Service Levels

30. Changing service levels would have little or no impact on physical operations undertaken within this activity, or on the financial performance thereof. Discussions are ongoing with contractors to seek more efficient ways of service delivery, but to date no significant step changes appear feasible;  in large part because a major part of contract costs are fixed.

Fees and Charges

31. Landfill and refuse bag fees have been detailed above. The landfill business in particular is a significant contributor to Council revenues, and profits made and cash surpluses generated have major impacts on Council’s ability to achieve rates and debt targets.


32. For these reasons the various operations within the Solid Waste activity are run on as ‘commercial’ a basis as possible.



33. Fees and charges are set firstly to ensure that costs and risks are covered, and secondly to generate reasonable profits within a competitive market, while at the same time contributing to community outcomes and recognising Council’s role as a leader in matters of environmental responsibility and customer service.

Reason for the review

34.       This review is required because 4 years have passed since this Activity was last reviewed.

Present arrangements for governance, funding and service delivery

35.       In considering Governance, Funding and Delivery Models it is worth splitting the Solid Waste Activity into its broadly component parts:

a.    Collection contracts and

b.    Landfilling operations

Taking each of those in order:

Collection Contracts

Both recycling and refuse collection contracts are contracted out to commercial operators and this is a fairly standard model throughout the country generally held to deliver greatest efficiencies and therefore best outcomes for ratepayers.  Current methods of funding are described above.  Other options exist but the current model of user pays for refuse and rating for recycling would logically seem to be best to encourage reduction of the former and the participation in the latter.  There may be efficiencies in taking a regional approach to these contracts and this is currently being investigated via the Regional Joint Waste Minimisation Committee.

Landfilling Operations

Delivery and Funding

Design and development, management and operation of Landfills is highly specialized and there would seem to be no other practical delivery option than the current tendering/contracting model.  With regard to funding the current user pays model is standard throughout the country and is in line with Council’s own Revenue and Funding Policy.


The current Governance structure is that the Landfill is owned by Council and governed in the same manner as other Council Activities.  Other models include CCO or a Joint Venture with or sale to a commercial operator.  Council has in the past taken expert advice on the CCO option, but this was not recommended.  Given the commercial nature of current operations it is difficult to see how a CCO operation could bring sufficient added value to offset the inherent tax liability.

Should any commercial operator express an interest in JV or Purchase then Council would no doubt consider such an offer if it looked likely to deliver greater benefits to ratepayers than the current model.  Given the specialised nature of landfill operations likely buyers or JV Partners are few and none have to date expressed any firm interest.

For these reasons officers do not recommend a full Section 17A review of the Solid Waste Activity at this time.





There are no appendices for this report.   







Author: Bruce Sherlock

General Manager, City Infrastructure







Approved By: Tony Stallinger

Chief Executive