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 …
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.’
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.