Pay dirt: Landfills fight for lucrative soil contracts

Rising landfill levies and a slowdown in construction have sparked instability within Victoria’s waste industry as insiders warn of aggressive tactics with operators fighting over contracts.

Competition over shrinking contracts is now so intense that some landfill businesses are touting truck drivers at the gates of their competitors and undercutting their opponents.

Competition is increasing among landfill operators for soil. Credit: Nine News

From July, the state’s landfill levy will rise $129 to $169 a tonne. Since 2018, the levy has doubled from $63 a tonne as authorities have sought to encourage recycling and prevent rubbish being unnecessarily taken to landfill. It has also been brought into line with other jurisdictions to prevent interstate dumping.

But concerns have been mounting that the higher charge is contributing to cut-throat competitive practices as construction work has slowed down, with more businesses fighting over diminishing revenue.

One major concern is that the increased charges have whittled down the margins of landfill operators and prompted more “aggressive efforts” to secure more soil coming from construction sites.

One industry source, speaking anonymously to avoid missing out on future work, said industry operators were employing increasingly aggressive tactics to secure landfill.

“There’s no question the landfills are fighting harder for work as volumes are down.

“They want the contaminated soil contracts and they’re working behind the scenes to get them.”

Another source said some landfill operators had employees waiting at the gates of facilities run by their competitors to lure truck drivers away with cheaper rates.

A third source said Big Build projects such as the North East Link and level crossing removals were on the front line over soil contract disputes.

They said the higher landfill levies were then driving up the cost of construction.

A Master Builders Association of Victoria spokesperson said some members were already factoring the levy increases into their practices, but others would take time to adjust as it added a burden to their bottom line.

“[It is] unfortunate timing as it places more pressure on cash flow for businesses and increases costs,” they said.

It comes as the Australian Competition and Consumer Commission investigates whether one of the state’s biggest operators, Cleanaway, should purchase Citywide Waste from the City of Melbourne, including a transfer station at Dynon Road.

The inquiry includes examining whether the purchase might eventually shut out rival businesses, particularly across Melbourne’s central and west regions, by imposing higher prices on them and providing lower-quality services.

“The ACCC is also concerned that the proposed acquisition may have the effect of substantially lessening competition in the supply of municipal waste collection services,” the statement of issues document says.

A Cleanaway spokesperson said their acquisition was subject to ACCC approval, but the company expected it to be completed “in due course”.

Australian Services Union secretary Tash Wark said the Cleanaway deal was bad for its workers and the community.

“It’ll push up the prices of garbage collection. An ostensible monopoly – our sanitation in the hands of one private provider – will lead to dirtier streets and fewer collections,” she said.

“And approval for this acquisition will push down workers’ wages. The ACCC has already said the proposal is likely to substantially lessen competition in the supply of waste-to-energy services in Melbourne. ”

An industry source said aggressive competitions from landfill operators also had the effect of diverting contaminated soil from the growing number of treatment facilities where the soil can be washed, burned and reused.

“Without these types of facilities, toxic soil ends up in landfills and in the air, many of them near densely populated communities in the west,” they said.

Dr Salman Shooshtarian, from RMIT University’s School of Property, Construction and Project Management, said landfill levies sent a good signal to the market about encouraging recycling but could have unintended consequences if not supported with other policies.

“The increasing number of incidents and reports that we’ve seen across Australia, especially in Victoria, means that having a higher rate of levy might be counterproductive in terms of illegal dumping of construction and demolition waste.

“Within the last few months we’ve received a lot of reports from illegal dumping incidents across the state.

“It needs a collaborative approach in fixing a system that can provide a level playing field for everyone.”

Shooshtarian said statistics showed Victoria generated 12 million tonnes in construction waste every year but a quarter of this still wasn’t being recycled.

He said the construction industry still relied on traditional methods of removing waste because of perceptions that sustainability practices would take too much time.

“There must be some behaviour change in the industry, either by enforcement, education or encouragement,” Shooshtarian said.

An Allan government spokesperson said the levy was reinvested into boosting recycling and funding the Environmental Protection Authority.

“By aligning our levy with NSW we will create an even playing field for investment and deter operators in other states from sending their waste across the border into Victoria,” they said.

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