Phones are ringing, emails are flying, and conversations on the sidelines of any waste industry meeting are turning to the hottest topic in NSW – the government’s proposed sale of WSN Environmental Solutions. On top of all the talk about possible buyers and likely prices, there are questions about what the sell off might mean for broader waste policy in the state.

Earlier this month, speaking at Nowra on the NSW south coast, Shadow Treasurer Mike Baird reportedly told the crowd all revenue from the state’s landfill levy would be ploughed back into waste projects if the Opposition wins power at next year’s election.

Environment spokesperson Catherine Cusack has since poured cold water on that idea, telling Inside Waste full hypothecation of waste levies is not the Opposition’s official goal: “we haven’t released our policy yet,” she said, although she claims “a lot of work has been done” in this area.

Like everyone else connected to the NSW waste industry, however, Cusack’s focus is currently on the WSN sale process, which she said is “going to be a big piece of the picture” when it comes to setting future waste policies for the state. Until it has more details on the sale, the Opposition won’t be making any announcements about alternate plans for waste policy in NSW.

“One of the things that’s holding us up is that the legislation before parliament is simply enabling a financial transaction – there’s no information at all about how the government’s going to be proceeding,” she points out.

Key questions – for Cusack and everyone else – include how the sale will be structured, and especially how closed sites will be treated. The long-standing market expectation is the government will retain control of closed facilities, stripping out WSN’s big liabilities to maximise the value of its other assets.

WSN has applied to extend the final date for acceptance of putrescible waste at its Eastern Creek landfill site from June 2014 to June 2016. Inside Waste has heard from reliable sources, however, that the Eastern Creek facility is likely to be included in the grouping of dead assets that the government will retain.

Cusack said the Opposition’s “principal concern” is ensuring that outstanding liabilities for all closed sites are funded, “and that any proceeds of the sale that go back to Treasury are net of the cost of liabilities”.

“[NSW Treasurer Eric Roozendaal] is setting up an entity whereby he can put closed landfills in there, and NSW taxpayers will continue to have liability for that. We need to ensure that liability is fully funded before the government goes and spends the [sale proceeds] on some other project unrelated to waste.”

“We’d also like to see more assurances about processes to ensure social and environmental outcomes are going to be achieved – that the sale is conducted in a way that bears those in mind.”

The Opposition has long pushed for WSN to be sold off, and Cusack said it will not seek to block the bill that will see that happen, “although we will be seeking assurances about the model”.

“At this stage we’re looking at amendments… but we haven’t taken final decisions,” she said.

Industry expectation is clearly that a sale will go through, although there’s plenty of raised eyebrows about the $300 million price tag floated in the mainstream media.

Without a good handle on the remaining airspace in WSN’s landfills, it is hard to put an accurate price tag on the organisation. As reported previously, the government is refusing to release the key Wright Report on landfill capacity and demand in Sydney.

A further complication around the value of the landfill assets is the complex nature of site ownership. WSN does not currently own several of the sites, including Lucas Heights - it leases the land from other government departments for nominal sums. How this structure will be adjusted prior to any sale is unclear, but sorting through it will certainly be a complicated process.

WSN has a bevy of council waste collection contracts. Despite its competitors regularly referring it to the ACCC, alleging it used its near monopoly on disposal to underbid on collection, market scuttlebutt suggest there will be several operators very keen to get their hands on this wheels business. The network of transfer stations dotted around Sydney will also be a key attraction for any potential bidders.

There appears to be less excitement about gaining control of the $50 million ArrowBio AWT, which was officially opened in mid-2008 but is still not operating at full capacity, raising questions about the technology.

Beyond conversations about the value of WSN’s various assets, there is also plenty of industry speculation about the form of the sale. Would selling the entire business create anti competition concerns? It seems unlikely Veolia – which broke WSN’s disposal monopoly when it opened the Woodlawn facility near Goulburn – would be allowed to restore that monopoly back in its own favour. But are two players in the municipal disposal market enough for Sydney?

With the rumour mill in overdrive, all parties are eagerly awaiting further details of the government’s proposed sale.

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