SA’s re­cy­cling guru Her­mann Erd­mann has no rea­son to look this happy.

SA pro­duces some 11 mil­lion scrap tyres ev­ery year, which are cur­rently col­lected for even­tual dis­posal by Redisa. Now govern­ment wants to take the fee and use it else­where …

The Witness - Wheels - - FRONT PAGE -

WHEN Wheels asked Her­mann Erd­mann, CEO at the Re­cy­cling and Eco­nomic De­vel­op­ment Ini­tia­tive of South Africa (Redisa), in April how a new tax on tyres would im­pact the Redisa re­cy­cling fee, he had to plead ig­no­rance to govern­ment’s in­ten­tions.

Back then, we asked if the new tyre levy that was an­nounced in the na­tional bud­get speech would re­place the ex­ist­ing waste man­age­ment fee and if not, what other amount govern­ment wants to slap on all new tyres sold.

The amounts in­volved are huge — in 2014 Erd­mann told

Wheels the tyre levies to Redisa amounted to R620 mil­lion a year, each cent of which was au­dited by three au­dit­ing firms — KPMG, Price­wa­ter­house­Coop­ers and Ernst and Young.

Erd­mann has now learned govern­ment wants the Redisa fee, which adds up to roughly twoand-a-half Nkand­las, to dis­ap­pear into the deep dark pool that is the fis­cus, and he wants none of it.

“We are in con­sul­ta­tion to make a writ­ten sub­mis­sion to the min­is­ter within the 30-day time frame, and firmly be­lieve that the in­de­pen­dent in­tegrity of all waste man­age­ment plan im­ple­men­ta­tion and fee col­lec­tion should re­main just that — in­de­pen­dent.”

In an ur­gent me­dia state­ment, Erd­mann on Tues­day said govern­ment’s new waste man­age­ment plan fund­ing strat­egy will re­sult in job losses and de­stroy the frag­ile re­cy­cling sys­tem Redisa has la­bo­ri­ously built over the past three years.

“Ac­cord­ing to the draft Waste Tyre Reg­u­la­tions pub­lished on Au­gust 12, fund­ing of the coun­try’s waste tyre stream man­age­ment plan will go into the fis­cus on Oc­to­ber 1.

“This means that the fledg­ing waste in­dus­try be­ing led by Redisa will be knocked back be­fore it has had an op­por­tu­nity to es­tab­lish a strong foun­da­tion.

“Not only will those within the Redisa struc­ture be neg­a­tively im­pacted, but ex­ist­ing in­dus­try play­ers such as the re-tread­ing in­dus­try will be hit even harder from a fi­nan­cial per­spec­tive, re­sult­ing in job losses and the as­so­ci­ated so­cio-eco­nomic im­pact felt in com­mu­ni­ties,” he said.

He hinted govern­ment should stop pay­ing lip-ser­vice to job cre­ation and stop over-taxing the en­trepreneurs who make those jobs. “We face mas­sive un­em­ploy­ment and shrink­ing eco­nomic growth in the coun­try, yet at ev­ery turn the govern­ment calls for busi­ness to cre­ate jobs, drive an en­tre­pre­neur­ial spirit and em­power pre­vi­ously dis­ad­van­taged in­di­vid­u­als.

“What is of­ten ig­nored is that govern­ment needs to cre­ate an en­vi­ron­ment where small busi­nesses can both de­velop and thrive, not cre­ate jobs it­self or even man­age the process.”

The plas­tic bags fail­ure

Cit­ing the Redisa plan as “an ex­am­ple of the per­fect col­lab­o­ra­tion be­tween govern­ment and pri­vate in­dus­try whereby the plat­form is pro­vided to Redisa as an NPO to op­er­ate, be ac­count­able and re­port back reg­u­larly to the Department of En­vi­ron­men­tal Af­fairs”, Erd­mann pre­dicts govern­ment will fail even more dis­mally at col­lect­ing and re­cy­cling tyres than it has in col­lect­ing a fee to re­cy­cle plas­tic shop­ping bags.

“What has made the Redisa plan suc­cess­ful over the past three years it has op­er­ated is its cur­rent fund­ing model — in which the fees are paid di­rectly to Redisa and spent in an au­ditable and ac­count­able fash­ion.

“In the past we have seen the fail­ings of govern­ment when waste man­age­ment fees are in­jected into the fis­cus. Since 2004 we have paid a levy on plas­tic bags to en­cour­age re­use and re­cy­cling while mit­i­gat­ing the en­vi­ron­men­tal im­pacts of plas­tic bag pol­lu­tion.

“This has in no un­cer­tain terms been an out­right fail­ure. A study by the CSIR re­ported that in the Fe­bru­ary 2006 fi­nan­cial year only seven per­cent of the levies col­lected ac­tu­ally got paid to the im­ple­men­ta­tion arm, Buy­isae-Bag, so it is per­haps not sur­pris­ing that the or­gan­i­sa­tion shut down with lit­tle to show.”

Erd­mann re­minded min­is­ter Edna Molewa that she had em­pha­sised the waste man­age­ment fee col­lected would not end up in the gen­eral fis­cus when the Redisa plan was leg­is­lated. In­stead the min­is­ter had made it the re­spon­si­bil­ity of tyre man­u­fac­tur­ers and im­porters to pay for re­me­di­a­tion of the re­sult­ing waste.

“The ad­van­tage is that Redisa is 100% ac­count­able for what hap­pens with the funds through strict cor­po­rate gov­er­nance prac­tices and au­dit re­quire­ments that en­sure these funds are ap­plied ac­cord­ing to the man­dates set out in the plan.”

Tax vs a fee

Erd­mann said un­der­stand­ing the dif­fer­ence be­tween the Redisa waste man­age­ment fee and a tax is crit­i­cal to en­sur­ing the on­go­ing suc­cess of this new tyre re­cy­cling in­dus­try’s de­vel­op­ment.

He said money col­lected from taxes dis­ap­pears into the gen­eral fis­cus, while the waste man­age­ment fee on the other hand is di­rectly and specif­i­cally ap­plied to deal­ing with the prod­uct and build­ing the re­cy­cling in­dus­try.

“These funds are man­aged re­spon­si­bly, in an au­dited and ac­count­able fash­ion, mak­ing it far more ef­fec­tive than a tax-based sys­tem where funds are di­luted into the gen­eral Trea­sury pool with­out be­ing ring-fenced,” Erd­mann said.

So what next?

Erd­mann said the Redisa plan pro­vides govern­ment with a tyre re­cy­cling so­lu­tion at no cost to the fis­cus that also cre­ates jobs, as con­firmed by the In­sti­tute of Race Re­la­tions as well as McKin­sey.

“It is our opin­ion that if the fees cur­rently col­lected by Redisa move into the fis­cus, it will bring to an end the sig­nif­i­cant head­way that we have achieved within three short years, af­fect­ing the waste pick­ers work­ing within the Redisa mi­cro-col­lec­tor pro­gramme; the univer­sity stu­dents who are ben­e­fit­ting through Redisa bur­saries and jobs such as the Redisa de­pot at Cato Ridge.

“The ap­proach un­der­taken by Redisa is one that was put in place to stim­u­late eco­nomic and so­cioe­co­nomic growth, and it’s work­ing. To re­move the one as­pect that makes it so suc­cess­ful and re­place it with an ap­proach that has proven to fail, would be short-sighted and to the detri­ment of all in­volved,” Erd­mann said.

‘In the past we have seen the fail­ings of Govern­ment when waste man­age­ment fees are in­jected into the fis­cus. Since 2004 we have paid a levy on plas­tic bags to en­cour­age re­use and re­cy­cling while mit­i­gat­ing the en­vi­ron­men­tal im­pacts of plas­tic bag pol­lu­tion. This has in no un­cer­tain terms been an out­right fail­ure.’

PHOTO: SUP­PLIED

South Africa’s re­cy­cling guru Her­mann Erd­mann (right) pre­dicts the same fate for tyres as is hap­pen­ing with plas­tic bags if govern­ment swal­lows the tyre re­cy­cling fee — which an­nu­ally amounts to about 2,5 Nkand­las — in the gen­eral fis­cus.

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