Category Archives: Regulation

What A Waste!

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Local government is like the unwanted stepchild (or even bastard) of Australian politics – not formally recognised by the Constitution, but expected to provide all the services that neither the Commonwealth nor the States want to deliver. So they get delegated with roads and recreation, planning, libraries, waste management and other more esoteric activities.

Most of their funding comes from Federal and State coffers, plus property rates, permit fees and income from sundry services, but they have limited discretion as to how and where to allocate their resources since local by-laws must be consistent with State legislation.

So when it comes to the straightforward provision of rubbish collection and waste recycling, it’s quite amazing how inconsistent these services are from once council to the next.

In the case of my own local authority, we now have four different waste bins, one each for: glass; recycling; organic; and general (i.e., pretty much anything else that does not belong in the other three bins).

In addition to having to remember which bins get collected each week, residents also have to interpret what items can actually go in each bin. For example, “glass” really means only bottles and jars – so no cookware, drinking vessels or other glass products. “Recycling” only covers paper, cardboard, metal cans and lids, foil, and a few categories of plastic bottles and containers (and only as long as the lids have been removed and placed in the “general” waste). Soft plastics such as food packaging are not accepted, nor are Tetra Paks (one of the most common forms of beverage containers). As for the “organic” bin (or FOGO – “food and garden organic”), while this is no doubt a helpful solution to separate valuable compostable materials from general waste, our local council will not allow us to use bio-degradable bags, so the FOGO is thrown straight into the bin (nice in the height of summer!). Yet my friends and neighbours who live in other local council areas are able to use these convenient bags to manage their organic waste. Go figure why there is this difference!

On the question of recycling drink containers, things get even more confusing when looking at the Victorian government’s Container Deposit Scheme (CDS). First, the CDS collection points, despite there being over 600 across the State, are still quite limited (by location and operating hours). Second, the list of eligible categories is shorter than the types of ineligible items (5 vs 7). Third, it seems that unlike local council waste collection, the CDS will accept container lids, and even Tetra Paks (but the latter only applies to flavoured milks, not plain or plant-based milks). Fourth, while my council is willing to accept any glass bottle that has contained alcohol, the CDS only accepts beer and cider bottles. Why do they have to make it so confusing and complicated?

I know that there have been huge problems with the collection and recycling of soft plastics. For a few years, it was possible to return most plastic food packaging (bags and wrappers) to local supermarkets for recycling. But whoever signed off on those service contracts forgot to check what was actually happening to these materials, until there were a series of warehouse fires and other problems. Yet, this reverse supply chain model would be a logical way to manage the CDS – we buy most of our drinks from bottle shops and supermarkets, so why not encourage us to take back the empties to the point of sale? When my family lived in South Australia in the early 1970s, there was already a CDS scheme for bottles, and I remember as kids we would collect the empties and take them back to the local milk bar and use the deposit refunds towards our next purchases. Made sense then, should make even more sense now?

Finally, another example of how inconsistent my local authority is when it comes to waste management: the council operates a depot where local residents can take a range of household items for recycling and disposal, including hard and soft plastics, batteries, electrical goods, computers and peripherals, and larger items that won’t fit in the domestic bins. I took a large plastic item all the way to the depot in person, only to be told I would have to book a hard waste collection service so it could be picked up when they next sent out a truck. Surely I was saving them time and resources by dropping it off at the depot myself?

 

Unintended Consequences?

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Last month, Melbourne City Council banned e-scooters for hire. The City’s Lord Mayor argues that the current trial needs to be re-set, as a result of increased traffic violations and personal injuries. So far, similar trials running in other local government areas adjacent to the City will continue, but they will no doubt be seeking to ensure the hire schemes are implemented and managed in a responsible, compliant and sustainable fashion, when the trials expire.

Despite the promised (and welcome) benefits of e-scooter hire schemes, I have yet to see current data that would support their continued operation. E.g., has the introduction of e-scooters reduced either the overall number of cars on the road, or the number of short car journeys under 2km?

I can see that e-scooters are probably popular with shift workers, largely because public transport services do not run at the times these commuters need them or where they need to go.

As well as living close to the City, I live in an adjacent LGA that is running a similar trial, so I have plenty of anecdotal evidence of the downside.

It’s not just users riding on pavements and in pedestrian-only areas with little care for those on foot. Many riders are carrying passengers (unlawfully) and choosing not to wear helmets (also unlawful). There appear to be a large number of joy riders, who often leave vehicles strewn across footpaths, rather than parking them responsibly. Then there are the helmets discarded without care or thought. Many of which probably end up in landfill, especially if they have been cracked or damaged through misuse. (A few months ago, I spoke to a Melbourne City Council street cleaner, and he admitted that if helmets are discarded like litter, they go into the general waste collection.)

I also see e-scooters for hire being lined up by their operators outside pubs and bars. I get that we don’t want people to drink and drive, but riding an e-scooter while drunk is hardly the answer!

I suspect that the obvious problems and misuse could have easily been anticipated, and even mitigated. Here are just a few suggestions:

1. Require all ride-share customers to have appropriate insurance. This could be done via the operator apps, and/or via a subscription model.

2. E-tag all helmets as well as the scooters themselves, so operators can keep track of their property. If I was an investor in these companies, I’d be concerned that they aren’t protecting their assets!

3. Require users to pass some sort of proficiency test – including basic road rules, and traffic regulations.

4. As well as limiting the vehicle speed, disable any e-scooter that is being driven on pedestrian-only footpaths or other “out of bounds” areas. The City of Melbourne and surrounding LGAs now have extensive cycle lanes, so there shouldn’t be any excuse for riding on pavements.

5. Consider attaching breathalysers to each scooter and applying weight limits on vehicles (to counter the problem of passenger over-loading).

Finally, the use of contributory negligence in assessing potential damages should be a default position. Indeed, any rider who causes an accident, injures a pedestrian or damages another vehicle or property, directly or indirectly as a result of the rider’s misuse or negligence should result in strict liability for all damages.

Next week: Ticket scalpers? Blockchain could fix that!

 

The Social License to Operate

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The “social license to operate” is best described as follows: companies only get to do business so long as they retain the trust of their customers, employees and other community stakeholders.

The current debate about de-banking reminds us that financial institutions are among the largest beneficiaries of that social license, especially in Australia where the so-called 4 Pillar banks operate under a protected oligopoly. If you want to be cushioned against external and internal competition, then you need to demonstrate why you deserve to retain that privilege.

Apart from arbitrarily shutting customer accounts, banks are also closing local branches and/or reducing their opening hours. They are scaling back on the services available at some branches, even though their archaic processes still require existing customers to attend in person for things like ID verification and to apply wet signatures on hard copy documents. Seriously, you can’t have it both ways – reducing customer access while at the same time forcing customers to get to a branch to sign papers. (In a recent case, I ended up dealing with three separate branches, as well as an inter-state department, just to process some standard forms.)

The Banking Royal Commission dealt our major financial institutions several reputational blows – but rather than forcing them to improve their ways, foster innovation, increase efficiency, embrace technology and lift the overall customer experience, it seems that the banks have hunkered down in defence. They use the findings of that very same Royal Commission to justify why they now need to employ more and more layers of bureaucracy, form-filling and pen-pushing, in an attempt to cover their backsides and to mitigate against the public backlash.

And it’s not just the banks that are under increased community scrutiny – supermarkets, utilities, professional service firms, property developers, telcos, builders, insurers, landlords and tech companies are all facing various criticisms, for things like price gouging, squeezing suppliers, corruption, monopolistic and anti-competitive behaviours, poor quality products and service, financial irregularities, atrocious consumer data protection, environmental damage, unconscionable contractual terms and unreasonable policies. Unfortunately, our regulators don’t seem capable of holding these parties to account, so it will largely depend on consumers and the community to stand up for their own interests.

Next week: More on Music Streaming

 

 

 

Is crypto finally going mainstream?

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Just as my last blog on crypto regulation went to press, news broke that CBA (one of Australia’s “four pillar” banks) will be adding crypto assets to its mobile banking app. Add that to the launch of a crypto equities ETF by BetaShares, and further media coverage of local digital asset fund manager Apollo Capital, and you may start to believe that crypto is finally going mainstream in Australia.

But, before anyone gets too excited, a few caveats are in order.

First, the recent flurry of announcements from the Australian Senate, ASIC and AUSTRAC are simply the latest stages in a long-running debate about how crypto assets should be regulated, serviced and distributed. Despite these positive noises, there is still some way to go before crypto reaches critical mass (even though data for Australia shows we have one of the higher rates of market adoption).

Second, there is a lot of noise out there, and not all of it here in Australia. The SEC, FATF, ISDA, Cboe and SGX are just a few of the institutional voices making announcements on crypto and digital assets in recent weeks. On top of that, of course, there is the President of El Salvador (and the Mayor-Elect of New York) weighing in on behalf of the politicians. Some of this commentary is mere posturing; some is about being seen to be doing something; and a large part is just the legacy markets trying to catch up (and hoping to take control?).

Third, a closer look at CBA, BetaShares and Apollo Capital reveal some significant limitations in terms of what their products actually offer:

The CBA is planning to launch a trial among a small sample of their mobile banking users (although, no doubt, if things go well, it will be rolled out more extensively). But it does not mean the app becomes a fully-fledged crypto wallet: customers will only be able to buy/sell crypto within the app, and they won’t be able to send crypto to third parties. Plus, only a small set of crypto assets will be available.

The BetaShares ETF is not offering direct exposure to Bitcoin or other crypto assets. Instead, the fund is designed to invest in companies (mainly crypto exchanges, miners and technology providers) that are significant or strategic industry players. While that may mitigate the market volatility (and price fluctuation) that crypto experiences, it doesn’t necessarily make for higher returns.

The Apollo Capital fund is only available to wholesale or accredited investors – not retail customers. And while Apollo has done a reasonable job of growing its AUM, I don’t believe there are any major allocations from Industry Super Funds (which manage 27% of Australians’ retirement savings), Retail Funds (21%) or Public Sector Funds (18%). And despite anecdotal evidence that Self-Managed Super Funds (SMSF) are more active in crypto assets (along with Family Offices and HNWIs), recent data from the ATO suggests crypto assets held within SMSF are not much more than $200m.

Having worked in this industry since 2016, it’s always been apparent from an institutional perspective that few want to go first, but nobody wants to be last, when it comes to launching crypto products and services. Of the three Australian stories this week, the most significant is probably the CBA; it certainly got a lot of attention at the recent State of Play presentation by Blockchain Australia, in large part due to the industry implications, and how it will help bring crypto to an even wider audience.

Next week: Summing Up (and Signing Off)