Re: “Is it Time to Replace the WDO?” by Usman Valiante (December/January 2008 edition)
On behalf of Retail Council of Canada (RCC) and our members operating across the province, I am writing in response to Usman Valiante’s article “Is it Time to Replace the WDO?” that appeared in the December/January 2008 issue of Solid Waste & Recycling.
As a long-standing member of the Waste Diversion Ontario (WDO) Board of Directors, I am writing to clarify and correct the factual inaccuracies contained in the article, as outlined below.
Inaccuracy #1: “…the Government of Ontario’s tenuous control of WDO… and the program development process itself all conspire to doom stewardship programs developed under the Act to failure.”
The reality is that WDO is a non-crown corporation and as such, the government does not have control over it. WDO was created under the Waste Diversion Act (WDA) for the purposes of developing, implementing and operating waste diversion programs for a wide range of materials.
Inaccuracy #2: “With regard to governance, the WDO and its subsidiary Industry Funding Organizations (IFOs) are under the unfettered control of producers.”
The governance structure of WDO, as outlined in section 4 of the WDA, currently includes representation from industry, municipal, non-governmental organizations and the Ontario Ministry of the Environment.
Stewardship Ontario’s Board (the only existing IFO under approved regulation) accurately and fairly represents the affected stewards of both Blue Box designated waste and Municipal Hazardous or Special Waste (MHSW). Representation is based on a pay-for-say model; that is, board seats are allocated based on the dollar amount of the fees paid to Stewardship Ontario in respect of the company’s obligation to fund 50 per cent of the Blue Box program. This ensures that the diversity of interests is reflected in Board decision-making and that affected sectors are appropriately represented.
As the Act obligates brand owners and first importers of designated waste, it is logical that the governance structure of the IFO would represent only these industry stewards. WDO has a different governance structure which reflects the diverse stakeholders engaged in waste diversion in Ontario, beyond manufacturers and first importers of designated waste. The board structures of both organizations are distinct, transparent and are not under the “unfettered control of the producers.”
Inaccuracy #3: “The IFOs…are told to assume the impossible and self-conflicted task of developing stewardship programs that internalize stewardship program costs to themselves…”
The Act is silent on cost internalization and does not grant the Minister, WDO or the IFO, the authority to direct stewards on how to manage their new stewardship costs. The Act only permits an IFO to assess fees against a designated steward (brand owners/first importers). It is the responsibility of individual stewards to determine how their fees will be managed internally and, ultimately, how the fees will be reflected in their product costs. This is not a government decision, but an individual steward decision. Furthermore, all steward fees abide by the Nexus principle; that is, fees levied are linked to the costs of services provided under the program.
Inaccuracy #4: “It’s not surprising that to date the WDA mandated program development process has produced programs that are of superficial or dubious environmental merit…”
According to the 2006 Stewardship Ontario Annual Report, the quantity of designated Blue Box waste recovered by Ontario municipal programs in 2006 was 937,979 tonnes, which represents a residential Blue Box waste diversion rate of over 60 per cent. The quantity of Blue Box waste recovered and recycled is projected to continue to increase through population growth, new recycling programs, and greater consumer education.
Inaccuracy #5: “…not one other waste diversion program has been successfully developed by WDO in the five years since the Act was passed… The levying of consumer fees to fund the proposed scrap tire program were found to be unconstitutional…”
Actually, WDO has developed several waste diversion plans in Ontario including for Used Oil, Scrap Tires and MHSW. The management of used oil filters and bottles has been incorporated into the MHSW plan and the scrap tire plan was deferred by the Minister.
As explained above, the Act is silent on levying consumer fees and only permits IFOs to levy fees on stewards. There is nothing unconstitutional for a steward who chooses to display an environmental levy associated with product stewardship programs at the point-of-sale to consumers; in fact, this is a consistent approach used in many other Canadian jurisdictions. When consumers are educated, they understand that such fees are not taxes since the funds collected from consumers are equal to and dedicated to the cost of running the stewardship program (the Nexus principle). Environmental stewardship is a shared responsibility and the transparency of fees helps reinforce this message by serving as an important education tool; transparent fees empower the consumer to understand and comply with product stewardship programs, thereby encouraging their participation.
Inaccuracy #6: “Designated for stewardship program development in December of 2004, Waste Electronics and Electrical Equipment (WEEE) program development remains embryonic with the stewardship organization — Ontario Electronic Stewardship (yet again another manifestation of Stewardship Ontario)….”
Ontario Electronic Stewardship (OES) is not a “manifestation of Stewardship Ontario” and bears no relation to the IFO for Blue Box and MHSW. OES is a new IFO created by WDO with a governance structure comprised of brand owners and first importers of electronic and electrical equipment that is responsible solely for waste electrical and electronic equipment (WEEE) in Ontario.
In conclusion, it is clear from Mr. Valiante’s article that he has a limited understanding of Ontario’s Waste Diversion Act and should not be writing about such complex issues. And in order to be credible, he should have taken the time to inform readers that he, as a consultant and lobbyist, also represents specific industry interests that have a stake in the outcome of waste management in this province.
Waste Diversion Ontario is an important and valuable organization. The board and its Executive Director have a significant stake in the development of waste diversion programs in Ontario and have expertise, understanding, knowledge and experience in program plan development, implementation and operation. WDO serves as a fundamental advisor to the government and the public on waste diversion issues and should continue to be treated as such.
If you require any further information or clarification, please do not hesitate to contact me directly.
Diane J. Brisebois
President and CEO
Retail Council of Canada
cc: The Hon. Dalton McGuinty, Premier, Government of Ontario David Harvey, Special Assistant, Communities Policy, Premier’s Office The Hon. John Gerretsen, Minister of the Environment, Government of Ontario Sabrina Grando, Chief of Staff, MOE Jamie MacDonald, Senior Special Adviser — Policy, MOE John Vidan, Director — Waste Management Policy Branch, MOE John Armiento, Supervisor (Acting) — Waste Diversion Unit, MOE Glenda Gies, Executive Director, Waste Diversion Ontario Gemma Zecchini, Chair, WDO WDO Board of Directors Joyce Barretto, CEO, Stewardship Ontario Stewardship Ontario Board of Directors
Usman Valiante replies:
Notwithstanding Ms. Brisebois’ assertion that I have a “…limited understanding of Ontario’s Waste Diversion Act and should not be writing about such complex issues,” I will respond to her assertions:
1. I said the Government of Ontario has tenuous control over the WDO — Ms
. Brisebois says it has none. To use a tired aphorism, the farmer has not little say regarding how many chickens the fox eats but absolutely none. Fine, I stand corrected.
2. Ms. Brisebois conflates board seats with real control. The producers (and I lump the mighty retail sector into this group) on the WDO Board also preside over IFO program development and therefore get to vote on their own programs. The producers call the shots, municipalities follow and everyone else watches. Example? When the Ontario deposit-refund program for LCBO containers was announced in September 2007 the WDO Board made a decision during its October 18 Board meeting to reduce the gross reported cost of the Blue Box for the prospective year by $18.8 million. This resulted in an immediate loss of $7 million to Ontario municipalities. Nevertheless, the municipal reps on the WDO Board voted for the amendment because any protest could result in a delay in filing the following year’s Blue Box plan by Stewardship Ontario which could then delay blue box payments to Ontario municipalities (i.e., squawk and you risk losing the whole pot of money);
3. “Cost internalization” and “visible fees” are counter-point buzzwords for the old question of “who pays” for stewardship. The Act repeatedly enunciates the phrase, “fees paid by stewards”. Ms. Brisebois dissembles when she states that, “It is the responsibility of individual stewards to determine how their fees will be managed internally…” because the stewards are not operating individually but in an IFO as a combine. With regard to the MHSW and WEEE program the result will be effective “non-competition” likely with a flat per product fee passed by all stewards through the supply chain to the consumer via retailers.
4. To suggest that the WDO is responsible for Ontario’s Blue Box ignores the fact that the Blue Box was established in the mid-1980s, municipalities were regulated to provide Blue Box Service in 1994 and throughout that time it was paid almost solely for by municipal taxpayers — all to the tune of about $1 billion. All WDO really did was adopt a scheme to have stewards cover 50 per cent of the costs of an existing municipal waste diversion program;
5. Successful = implemented, which means WDO is batting zero right now (hopefully that will change soon). My reference to unconstitutionality of fees was with regard to fee scheme proposed by the Ontario scrap tire program. Here is what the lawyers from the Attorney General’s office said in that regard, “As a matter of constitutional law a regulatory charge can be made for the purpose of defraying a regulatory program. However, there must be a connection between the payor and the regulated activity. If that element is lacking as it is in this instance, then the regulatory charge takes the appearance of a tax (i.e., a re-distributive levy) rather than a regulatory charge (i.e., a cost recovery levy).”
6. The same cadre of policy people that were core to Corporations Supporting Recycling thus wrote the Blue Box Plan and the MHSW plan (as Stewardship Ontario) are now writing the WEEE plan (while reporting to the Board of OES).
Coming from the lobbyist for a massive economic sector of the Canadian economy I guess I should be flattered that Ms. Brisebois thinks I am part of the lobbyist sorority and that she felt it necessary to copy her response to The Premier of Ontario. Alas, I am but a humble policy analyst who occasionally needs to advocate on behalf of interests that singularly want to see more waste diversion but get trampled by those who spend less time on sound waste diversion program design and more on lobbying to maintain their power and status at WDO.
— Usman Valiante
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