City staff advise against contracting out east-end garbage

A report to the public works committee says the best way forward for garbage collection is to maintain the status quo, chair considers deferral

Thestar.com
Sept. 15, 2015
By Jennifer Pagliaro

Mayor John Tory’s council allies are questioning the numbers used by city staff to recommend against contracting out garbage collection east of Yonge St.

A report released Tuesday found it may actually cost more to privatize pickup in at least one east-end district despite what the city says was $11 million in annual savings from contracting out the same services in the west end.

That creates a challenge for Tory, who during the mayoral election promised to privatize the remaining garbage pickup, citing cost savings - a long-held position by rivals Rob and Doug Ford. But after taking office, Tory said staff warned him those savings had been significantly reduced.

On Tuesday, he led criticism of the report.

“There are a number of unanswered questions in the report including private sector bid costs, which have been assumed and are not tested, and the impact, if any, new collective bargaining agreements could have on the city’s cost figures,” Tory’s office said in a statement.

Public works and infrastructure committee chair Councillor Jaye Robinson, a member of Tory’s executive who says she’s in favour of contracting out, said she won’t accept the report as-is. She said she may move to defer the report to a later date with the contracts for unionized city workers expiring at the end of the year.

“The report falls well short of the mark, and I have serious questions,” Robinson said, adding many of her residents in Don Valley West east of Yonge St. favour contracting out garbage.

She argued a major issue is the private-sector prices assumed in the report don’t reflect what the city could actually secure in future bids.

City staff considered contracting out all of east-end or just one of the two districts east of Yonge St.

Staff tried to estimate what it might cost to contract out collection versus public service pickup over seven years, from 2017 to 2023. They compared the cost of contracted-out service in Etobicoke’s District 1 to in-house service in Scarborough’s District 4. They based the contract cost on the most recent garbage contract secured in 2014 for District 1.

According to the city, those two suburban districts have comparable geography and building characteristics. Staff found the future cost reflected in present dollars of in-house service in District 4 - $96.8 million - is cheaper than assumed District 1 contracting-out costs at $116.8 million.

The report said the productivity of east-end collection has improved since west-end collection was first contracted out in 2011, further lowering potential cost savings.

“Provided that these gains are sustained and improved, the best value and lowest risk to the City of Toronto at this time is to continue with the current model,” the report says, adding they could revisit that assessment in two years.

Public works committee member and Etobicoke Councillor Stephen Holyday, whose father Doug Holyday championed west-end privatization of collection as a city councillor, said he too needs more information in order to make a decision.

“My initial reaction is surprise, of course, and my desire to ask a lot of questions and some of those questions will include ones that are labour sensitive,” said Holyday. “The question running in my mind right now, is it time to send this report to the penalty box for a few months until we can iron out all those details?”

Councillor Gord Perks said he’s happy with the conclusion reached by staff from a “clear” and “thorough” report.

He said staff followed the same comparison of east and west districts used in the past and that the private sector prices are up-to-date, using the most recent contract secured in 2014.

“I’m disappointed that my colleagues, if they don’t like the answer, try to change it,” Perks said.

“And I’m disappointed that my colleagues are so ideologically bound to contracting out that they would reject direct numbers from staff.”

A review of the city’s work by Ernst & Young said any future bids “would be dependent on the market conditions during the procurement process” but that the solid waste division had done a “reasonable job of estimating these potential bids based on the 2011 bids and 2014 bids.”

Also part of the equation is potential labour relations issues, which were not disclosed and are part of a confidential report. Staff say those concerns are especially at issue in the east-end District 3, where vehicles and resources are shared for night collections.

The Ernst & Young review noted the city’s position is that there would be a “significant cost” to re-deploy unionized staff working in District 3 that would “significantly reduce” potential cost savings. But it also noted that redeployment is a one-time cost.

The public works committee meets Sept. 22.