NSWMA - 01-01
Competitive Neutrality in Solid Waste Collection and Disposal Services
|Publication Date:||1 March 2001|
In a competitively neutral environment local government authorities should not enjoy a market advantage over the private sector by mere virtue of ownership. The concept of competitive neutrality appears simple; however, ensuring a level playing field is difficult because it requires government entities to rethink the policies by which they operate. For example, the public sector must give up the protections and special privileges that are inherent with public ownership. Barriers created by institutional constraints should also be removed to allow public entities to increase productivity.
Government entities are often criticized when trying to ensure competitive neutrality because of their anti-competitive practices. These practices include setting prices without fully accounting for the costs of providing garbage and recycling services and offsetting costs through subsidies such as taxes or other financial mechanisms that are unavailable to privatesector companies. In addition, localities often gain an unfair advantage by adopting ordinances that impose regulatory costs on the private sector that do not have to be paid by the government such as requiring performance bonds. Sometimes, the bidding process creates unfair competition by allowing the public sector to adjust their bids after seeing the private company bids.