April 2012        

Bin charges in Dublin: The Greyhound connection


Brian Buckley of Greyhound Recycling and Recovery took over bin collection in Dublin in January. He held a party in the Orwell Hotel on 18 February with the theme “gangsters and molls.” It’s ironic that Tony Soprano’s day job was “waste management consultant,” and that the Mafia were involved in waste disposal in New York in the past.
     Greyhound got the contract because Ernst and Young—who received a fee of €250,000—recommended them. This occurred even though CIE got €1 million in compensation in the courts from Greyhound before they were given the contract.
     Greyhound had overcharged CIE, but Ernst and Young said they knew nothing about this.
     The bin collection was taken over by a private unlimited company owned by a company registered in the Isle of Man. Because the unlimited company does not have to produce accounts, and the Isle of Man company is secret, the people of Dublin will never know how much Buckley will make from collecting the bins.
     Market economists, sometimes called “independent” or “celebrity” economists, argue that privatisation will increase competition and so will reduce prices and costs.
     Greyhound will be the only provider, and will have a captive market, because people have to get their bins collected. This means that the present fixed charge of €100, €6 for a large bin, €3.60 for a small bin, and €3 for a bag, will go up, and in future households will be worse off.
     The privatised firm paid a cash price and gets the sole right to exploit the consumer in the future. Already Greyhound is using the law to stop competition; and because Greyhound was given all the routes and household information, it is difficult for other firms to compete.
     Forty thousand households have a waiver, but this is likely to be eliminated after a year, as Greyhound has already stated that “we are not in the waiver business, we are in the waste business.” The company has threatened to do away with the waiver in south Dublin and asked for a subsidy of €3 million to allow some householders to keep the waiver. If it goes, poor people will suffer a drop of about €6 a week in their income.
     The wages of the city council workers were good, as they were unionised. Greyhound workers are less well paid. The council workers had good conditions; Greyhound have worse conditions. There will be fewer workers per lorry, and more households per shift. Fewer lorries will be needed. A smaller office staff will also be needed.
     So these all reduce costs and increase profits. The increase in charges will also increase profits.
     Buckley is going to do well out of this, at the expense of households and workers. There is a reduction in payroll, because of fewer employees and lower wages. This means lower payroll taxes. The company pays taxes on profits; but the company is in the Isle of Man.
     So, company taxes will be payable in the Isle of Man or they will be payable at 12½ per cent if taxable in Ireland. Ireland has a double-tax agreement with the Isle of Man that allows an individual resident in the Isle of Man with income from Ireland to pay tax on their income in the Isle of Man. This would apply to Buckley if he is resident there.
     So the tax take will be down as the increase in company taxes will be less than the fall in taxes on wages. This means that there will be a net annual cost to the Government.
     At present there is no regulator for waste collection companies, so there is no body to protect householders’ rights. The Government washed its hands of the issue in the Dáil. The city manager said that privatisation is a “reserved function”—i.e. elected councillors have no say—so he went ahead with it.
     Ultimately, the manager reports to the minister for the environment, so the buck stops with the Minister.
     So in summary: charges will go up; waivers will disappear; workers will work harder for lower pay; and Buckley will go to his bank in the Isle of Man with massive profits. This is a licence to print money.
[KC]

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