Interview

Action must follow the words

The future of the water and environmental service branch depends very much on political decisions.

A close look at the new government’s coalition agreement

REMONDIS aktuell spoke to REMONDIS managing director and Vice President of the BDE, Andreas Bankamp, about the core subjects of the coalition agreement and the expectations the water and environmental service industry has of the new German government.

REMONDIS aktuell: Are you talking about the fact that municipal providers of public services do not need to pay VAT?

Andreas Bankamp: For example. To begin with it was said that private and public companies must face the same tax conditions in the future. In the final version of the coalition agreement, however, a further clause was added to this important point which excludes municipal companies providing ‘important public services’ from these changes. Fair competition will once again fall by the wayside. Consumers will only be able to benefit from fair and stable charges when politicians push through equal competition rules for all market players no matter whether they are in the private or public sector.

REMONDIS aktuell: Have you got any concrete examples of this?

Andreas Bankamp: The example of Lüneburg demonstrates what happens when there is a lack of fair competition. Since the local council renationalised its waste management activities around two years ago, it has only recorded losses and it is now increasing its charges by an incredible 33 %. In Kassel, where waste management activities have always been run by purely municipal companies without there ever being fair competition, there is the threat of charges being increased by up to 50 %. Precisely those things are happening that we have always warned against: without fair competition, local inhabitants must pay more. And that is neither socially minded nor fair!

REMONDIS aktuell: Is this true for all local councils?

Andreas Bankamp: Absolutely not! Just look at the many successful public private partnerships such as those in Frankfurt, Oberhausen, Düsseldorf or Essen. Right from the beginning, they have been paying the correct amount of VAT as well as business tax and corporation tax and yet they are run so efficiently that local charges have been kept stable or even decreased. It is a fact that more than two-thirds of all local inhabitants already pay VAT on the collection of their mixed municipal waste. Fewer than one-third have the privilege of being exempt from paying VAT, namely those whose services are provided by purely publicly run companies. Thanks to the redistribution rules, money collected from VAT is paid back to all councils – even those that did not pay VAT. What has this got to do with a fair tax system?

REMONDIS aktuell: Another paragraph further on in the coalition agreement, however, states that efforts should be made to treat waste management companies equally when it comes to taxes.

Andreas Bankamp: The question that remains, though, is how and when. Will private sector companies also be exempt from paying VAT or will municipal businesses have to start paying VAT? Our branch together with all those employed in it will, in the future, be judging the new Government on the sustainability of such declarations. Moreover, the governing parties are planning to keep the VAT exemption rule for municipalities active in water resources management if the activities involve wastewater. It is however, impossible to understand why VAT must be paid for supplying water but not on wastewater treated by local councils. Fair tenders are generally not issued here. No competitive comparisons far and wide. Local inhabitants are forced to simply accept wastewater charges without the best prices being found through competition. This situation must be changed.

REMONDIS aktuell: In another section of the agreement, it is said, for example, that the Government wishes to check the feasibility of introducing a recycling bin. Is the new Government about to turn the recycling sector upside down?

Andreas Bankamp: No, I don’t think so. But there are also some very welcome starting points. Being a privately run company, we are used to checking the market potential of innovations and, if necessary, to implement them quickly. If, therefore, the Government is saying that they wish to have a waste management sector that is economically and ecologically more efficient and consumer-friendly then that fits in very well with our plans as we have both the know-how and necessary dynamics to implement such intentions. There must not be any taboos though. The waste management sector can make a great contribution towards limiting climate change – and therefore as a further German contribution for Copenhagen – for example by extending product responsibility beyond pure packaging to include so-called non-packaging of similar material. There is a great deal of potential here! We are already allowed to act in this direction abroad and the results are considerable. If Germany fails now to take a qualitative step forward, then we will lose our leading role within the recycling branch over the long term!

REMONDIS aktuell: Some of the legal framework conditions will also be changed soon. The new Government is planning to amend the Public Procurement Act by the end of 2010 and the Environmental Law is also to be revised. What are you hoping the changes will be?

Andreas Bankamp: The interests of private sector medium-sized businesses must definitely be taken more into account in the Public Procurement Act. There is a need for action here at EU level, too. Loopholes, such as the so-called “intermunicipal cooperation work”, which in reality excludes private sector companies from the competition, must be got rid of. Especially as the many successful PPPs show day after day that municipal businesses are clearly able to operate competitively and highly efficiently even if they have to pay VAT. It should not be a problem for service providers to face fair competition. This is all we are asking for.

In the future, the Environmental Law will be even more oriented towards climate change. It is not enough to just think about trade in emissions and a successor to the Kyoto Protocol. It is precisely here that the water and environmental service branch can make a much greater contribution – not only in Germany but across the world – if there are the right legal framework conditions and the innovative strength of medium-sized businesses is not forced to slow down.

REMONDIS aktuell: If the new Government allowed you to make a wish what would it be?

Andreas Bankamp: Action must follow its words and it must not allow special individual interests to put it off its course of supporting medium-sized businesses.

REMONDIS aktuell: Mr Bankamp, thank you very much for the interview.

“The many successful PPPs show day after day that municipal businesses are clearly able to operate competitively and highly efficiently even if they have to pay VAT.”

“The waste management sector can make a great contribution towards limiting climate change, for example by extending product responsibility beyond pure packaging to include so-called non-packaging of similar material.”

Only fair competition can guarantee stable local charges.

The innovative strength of medium-sized businesses must not be forced to slow down.

“The waste management sector can make a great contribution towards limiting climate change, for example by extending product responsibility beyond pure packaging to include so-called non-packaging of similar material.”