Committee votes to extend private Toronto garbage collection for $289M

September 17, 2024 Canuck

A city committee voted to renew private garbage collection in Toronto’s west end, even as staff continue to study the feasibility of bringing the service back-in house in the years ahead.

The city’s general government committee approved the new contract to incumbent service provider GFL Environmental for a new five-year term starting in 2026. The $289 million contract also has the option for two one-year extensions until Aug. 2033.

But committee member Coun. Lily Cheng questioned why the city would continue contracting out the service when promised cost-savings are no longer being realized by the city.

“I think we corner ourselves into creating some kind of monopoly (by contracting out), because the company builds that capacity, and then it’s very hard for us to negotiate, and we are now in that situation,” Cheng said. “There’s no longer a cost benefit to this contracting out, and here we are committing to five more years.”

In 2012, the city made the controversial move to privatize garbage collection west on Yonge Street to over 158,000 single family households. Matt Keliher, general manager of the city’s solid waste services division, said the city hoped to save $10 million a year based on the finding of an auditor general’s report.

But the cost of the privatized service is now about the same as in-house collection run by the city east of Yonge Street, he said during a meeting Tuesday.

The initial $186-million contract for residential waste collection in District 2 — the area west of Yonge Street to the Humber River — was signed in 2011 and set to expire in August 2021. The city extended that contract for two three-year terms which expire in 2026.

“This contract is more expensive than the previous one, as you can appreciate with the increased cost of labour, inflation, cost on vehicles, etc.,” Keliher said. “Right now, it’s looking at pushing very close to what the cost of an internal service provider would cost.”

In April, all but two city councillors voted with the mayor, requesting city staff study the feasibility of bringing waste collection west of Yonge Street back in-house. That report is expected to be provided to city councillors early next year.

Chow’s spokesperson Arianne Robinson said the mayor is open to transitioning the service back into city hands.

“Mayor Chow wants to explore bringing garbage collection service back in-house,” she said in a statement. “She requested Solid Waste Management Services to bring options for this forward, and looks forward to a report back in 2025.”

Cheng said council needs to re-evaluate future private garbage contracts.

“I think some privatization, some competition is good, but maybe we need to do it on smaller scales and not expect companies to do huge parts of our city, and then setting themselves up to become larger and larger corporations,” she said.

Man looks a screen, resting his chin on his hand. — Coun. Paul Ainslie says privatizing garbage collection in the west end of the city has saved taxpayers money, but a debate about future contracts may be inevitable as the cost savings shrink. (Alex Lupul/CBC)

Veteran councillor doesn’t regret contracting out service

Committee chair Paul Ainslie was on council when it voted to privatize the work in 2011. He doesn’t regret the decision.

“I think it has been worthwhile for city taxpayers,” he said. “Compared to bringing it back in-house, we’re still saving money. We’re not saving as much money, I think, as the original estimate when it was first awarded, many years ago.”

But Ainslie acknowledged re-visiting the decision to privatization collection west of Yonge Street could be on the horizon.

“We might be having a conversation around … collecting, privatizing our garbage collection in half the city. Is it really worthwhile?” he said.

While the committee’s endorsement is necessary, city council will make the ultimate decision over the contract at a meeting in October.

Coun. Stephen Holyday stressed that council should adopt the report and award the contract. It locks in anticipated price increases for the service at three per cent over the potential seven year agreement. That’s good for taxpayers, he said.

“We know garbage collection is essential for city life, and I think we have to move on and make sure that the garbage keeps getting collected, as it has for many years,” he said.

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