Stewardship Ontario CEO finally talks

July 16 2010 by Ellen Roseman

Gemma Zecchini, head of the group that runs the eco fee program, has given no interviews since the controversy began this month.

Typical of embattled CEOs, she picked late Friday to put out a news release apologizing for the embarassing mistakes.

“Our entire team feels terribly about the way in which our programs – and the way they are paid for – have angered consumers,” Zecchini said.

“We have listened to consumers and we have heard them, loud and clear.”

The organization will respond to criticism in the following ways:

* Post information on its website about the way it charges fees to the businesses that
manufacture, market, or sell products that ultimately wind up as waste.

* Ask consumers to contact the Stewardship Ontario call centre if they believe they
might have been over-charged, in order to help retailers to resolve any calculation errors
that may have been made.

* Advise businesses that they can’t charge eco fees in excess of Stewardship Ontario
guidelines, or they will face consequences for failing to comply with existing provincial
legislation.

* And increase communications to encourage people to use the Orange Drop program and bring household hazardous waste – like old paint cans and fluorescent light bulbs – to a municipal depot, collection event or participating store.

Stewardship Ontario said it’s helping the government with policy options to ensure that fees are accurately applied on designated products and communicated transparently to consumers at the point of sale.

I think this announcement is not enough. Price errors have been made and will continue being made for the next few weeks or months.

The Ontario government should stop stores from passing along eco fees on customers’ bills until this mess is straightened out.

25 comments

  1. Joanne (BLY)

    Jul 16 2010

    Thank you for staying on top of this topic. I’ve added your site to my favs list.

  2. AlbertaLyle

    Jul 16 2010

    So in your last sentence, are you really suggesting that stores should not be able to pass on eco fees? You want the stores to pay but not be able to pass on their costs until some review process happens? Seriously?

  3. AlbertaLyle

    Jul 16 2010

    So the small business down the street from you that provides a living for its owner and family, and maybe a couple of staff should eat this fee/tax/ripoff? You want the mom-and-pop store to subsidize you?

    Maybe they should just forget about all of their costs and pass along everything in their store for free. You helped bring Ontario’s Liberal overlords into power, perhaps you should share the pain (that’s you the voters, not necessarily you specifically).

    Thank goodness this insanity has not made its way to Alberta, yet.

  4. Jamie

    Jul 16 2010

    They should not be able to pass on the fees UNLESS there is an indication of the fee on the price tag or nearby sign, and notation of an extra fee in any price advertising, so consumers have a chance to price compare between stores and know if they have been overcharged.

    The two noted for errors with the eco fee, Canadian Tire and Home Depot, proudly display their “commitment to price accuracy” by adhering to the “scanning code of practice”. If the customer gets charged more then expected they get the item free or $10 off (we’ll ignore many Canadian Tire dealers don’t want to follow it without a struggle).

    But with the eco fee, neither intended to have any display of what the fee is until the customer paid. On top of that they charged way too much…and their response is “oh well, if you notice make a trip back to the store, line up, and we’ll give you back your 50 cents”?

  5. Stephanie

    Jul 17 2010

    “Our entire team feels terribly about the way in which our programs – and the way they are paid for – have angered consumers.”

    There it is, folks — the from the “horse’s mouth”, I suspect Ms. Zecchini inadvertently spoke the truth here: The team “feels terribly” (meaning they are not competent at feeling) rather than “feels terrible” (meaning they feel bad).

    According to her phrasing, the organization’s apparent inability to feel applies to the anger of consumers, not the inept and reckless manner in which the program has been run.

    Perhaps her expensive “communications expert” should help her learn to couch her words better.

  6. Lee

    Jul 17 2010

    I’m glad the media is finally on top of this story and actually forcing some response from Stewardship Ontario and Canadian Tire (one of the few retailers actually passing the cost on to consumers).

    I found about the eco-fee on July 2nd when Canadian Tire charged me $.96 on a $3.99, 950 ml bottle of no-name fabric freshner. I did my research, realized they overcharged me significantly and went off for a refund. They wouldn’t give it to me, so I returned the product and made sure HST was refunded on the entire price (eco-fee included).

    Most people, including my husband, wouldn’t have bothered, but I’m hoping this debacle makes people start questioning what they’re being charged by stores.

    We are so conditioned to just accept fees and taxes without question that government and retailers don’t think twice about gouging us.

    As for me, I’m simply not buying any products subject to the eco-fee at Canadian Tire and I will stock up on my next trip to the U.S. or another province if other retailers start charging the fee to consumers.

  7. second opinion mike

    Jul 17 2010

    I am amazed that things are going so well in Alberta that the biggest concern is for Ontario small business owners. I do agree however that the solution is not to have the merchant eat the fee; but rather to suspend the tax indefinitely.

    I would like to see a legal review of the tax which is being managed by an unelected organization as well as a full parliamentary review (provincial) of how this questionable tax was able to take effect without public knowledge.

    I think it would be enlightening to read the emails on how the eco-taxation strategists decided to hide the tax in the HST adjustments on July 1st and how they coached the industries and retailers in the best ways to hide the tax.

    The public is getting treated like morons and we need to see some significant push back against a government that looks increasingly to be waging economic war with the electorate.

    p.s. too bad we could not just increase some Royalties to hide our excessive spending like those lucky Albertans.

  8. Jamie

    Jul 17 2010

    I wonder why a few days ago the stewardship ON line was:

    “The eco fee is determined by the manufacturer or retailer. By law, our stewards – the companies that make or distribute the products that can be recovered through Orange Drop – pay Stewardship Ontario a fee based on the amount of these materials they put into the marketplace. Our sole relationship is with our stewards. We have no authority over how stewards manage the fees within their operations”
    http://www.makethedrop.ca/content/understanding-eco-fee

    But now suddenly they do have authority in this news release:

    “Advise businesses that they can’t charge eco fees in excess of Stewardship Ontario guidelines, or they will face consequences for failing to comply with existing provincial legislation.”

    Huh?

  9. Charles

    Jul 17 2010

    There is no PDF at the email address for the list of stewardship fees that you published on July 10th. Has the PDF been deliberately removed? Do you have an updated URL?
    http://www.stewardshipontario.ca/sites/default/files/stewardfees.pdf

  10. Ellen Roseman

    Jul 17 2010

    Hi Charles, you can find a link that works at my blog post a few days ago on Canadian Tire overcharging on eco fees.

    The URL you gave works if you use capitals at the end, StewardFees.PDF. (I retyped it in my column and missed the two capital letters.)

    A lot of people asked if it had been deliberately removed, but it wasn’t.

    A sneaky tactic, in my view, to make it case-dependent

  11. John S

    Jul 17 2010

    Sorry, Ms. Zecchini. Your comments are too little, too late. The Empress has no clothes. And it is not a pretty sight.

    This is taxation without representation. This is a fee that has been installed by stealth, in the interest of “creative revenue generation,” rather than environmentalism. We can tell the difference.

    Now, if you would kindly resign, and take your consultants with you, we can get on with the business of living, happily without the bloating cost of your bureaucracy.

  12. Usman Valiante

    Jul 18 2010

    Fees or Taxes?

    Understanding “eco-fees” on consumer products

    By: Usman Valiante

    Canadian waste diversion schemes for various wastes — old televisions, for instance — are almost invariably accompanied by a consumer surcharge levied on the sale of new televisions. Classified as “advance disposal fees” (ADFs), and more commonly referred to as “eco fees”, they are applied in order to generate revenues to cover the specific costs of a given waste diversion program.

    Proponents of extended producer responsibility (EPR) — such as the new Ontario Zero Waste Coalition — claim that the “…’eco fee’ becomes analogous to a green tax that [consumers] have no choice but to pay, with only a vague idea that some good will come from the program.” They further argue that for EPR to be a meaningful policy approach to waste minimization the end-of-life costs of managing products need to be “internalized” to producers such that they become another cost of doing business. Once internalized, these costs become subject to market forces arising through competition between various producers of like goods. This, they posit, will drive firms to lower those costs by designing products “for the environment” more efficiently.

    But competitive environments are not the initial conditions in which Canadian waste diversion programs are established. Almost singularly, Canadian waste diversion programs operate as combines of producers that coalesce to develop and implement one common program.

    To fund the program, these combines don’t assess the individual costs of recovering and recycling one another’s old TVs to then invoice them for their “individual total” television recycling costs. Rather, they take the overall net waste diversion program costs for all televisions and then prorate those costs over the entire combine’s aggregate unit sales to establish a common or “fixed” sales unit fee.

    While jurisdictions might hold product producers (i. e., brand-owners and first importers) to be the “responsible” party, in a common fee system these producers “pass on” their common financial obligations to retailers who collect the unit sales fees from consumers (as visible “eco fees”) and then remit those eco fees to the stewardship organization.

    Thus, under these programs, producers have no financial responsibility for the program and do not compete on financial efficiency or environmental performance as they would were they to run individual waste diversion programs for themselves.

    Whether fees levied under these systems amount to “taxes” really requires asking the question in the two separate (though as we shall see, related) areas of law and economics.

    Canadian common law has established a number of filters to distinguish a fee from a tax.

    Firstly, to be a fee, the charge must be part of a valid regulatory program. Accordingly it must be the product of a, “… complete and detailed code of regulation …” which in the case of a waste diversion program is the laws under which the program is developed and the resulting waste diversion or stewardship program plan itself.

    Furthermore, the regulatory program in question must have a specific purpose which, “… seeks to affect the behavior of individuals…” In the case of waste diversion, the behavior in question might be to induce producers to establish and fund the waste diversion program and perhaps to design more easily recovered and recycled products.

    Another consideration is whether there is an assessment of the “… actual or estimated costs of the regulation” which, in this case, is an estimate of the costs of the waste diversion program. Tied to this is the concept that a “… reasonable connection is shown between the cost of the service provided and the amount charged.”

    Finally, a legitimate fee-based regulation should establish “… a relationship between the regulation and the person being regulated, where the person causes the need for the regulation, or benefits from it.”

    Thus “fees” are more than simple revenue generating mechanisms. They are at their best economic instruments designed to modify the behavior (verily, the essential purpose of all economic regulation) of “regulated” parties that have caused the need for regulation.

    In waste diversion programs that claim the mantle of EPR, it is self-evident that the producer — not the consumer — is the regulated party and by virtue of the waste associated with its products is the “person” that causes the need for regulation. Furthermore, under a program consistent with EPR principles, the behavioral objective is to have producers take responsibility for implementing, operating and bearing the cost of waste diversion as a part of their ongoing competitive marketplace activities.

    As discussed above, while many Canadian jurisdictions ostensibly regulate producers in order to establish waste diversion programs, consumers typically foot the bill of regulation. Producers only experience the modest inconvenience of having to convene and administer a common waste diversion program (often run by a third party, all at a cost to the consumer) with no competitive implications whatsoever.

    The legality or illegality of various ADF schemes is moot. However, the economic outcome on producers and consumers is not.

    In its economic effect on television producers an ADF levied on the sale of televisions is indistinguishable from an equivalent “TV tax” implemented through a provincial tax statute specifically for the purpose of generating revenues for a government run provincial television recycling program.

    ADF systems are not EPR. They are in essence and effect publicly sanctioned and privately levied taxes.

    Usman Valiante is principal of Corporate Policy Group in Orangeville, Ontario. Contact Usman at valiante@corporatepolicygroup.com

    Jun 2008

  13. I have a question

    Jul 18 2010

    Gemma Zecchini—–you are useless.

  14. Andy B

    Jul 18 2010

    I want to see the ecotax included in the price, so I can compare the cost.

    Now, as did happen, CT and have a lower advertised price, and put a massive Eco-taxable-fee on, while WallM, has a slightly higher price but a lower Eco-tax.

    As the Tax is not applied by law, but a suggestion, stores do not have to charge the same Eco-Tax.

  15. Jay

    Jul 19 2010

    The only way this will be tolerable will be for the eco fee to be reflected on the price tag.

    Either incorporated into the price (I think this would be easier on existing systems), or as a separate listing on the sticker.

  16. Jamie

    Jul 19 2010

    Wow, Canadian Tire must have really felt pressure over this, they’ve just announced they are removing the fees
    http://www.thestar.com/news/canada/article/837559–canadian-tire-scrubs-eco-fees?bn=1

    Can Home Depot be far behind?

  17. Norma

    Jul 19 2010

    Canadian Tire has just announced that it’s scrapping its eco fee and will absorb the cost, for now.

    http://www.thestar.com/news/canada/article/837559–canadian-tire-scraps-eco-fees?bn=1

  18. Marie

    Jul 19 2010

    You can read an article called “Canadian Tire stops charging controversial eco fees; blames ‘complex’ system”
    http://ca.news.finance.yahoo.com/s/19072010/2/biz-finance-canadian-tire-stops-charging-controversial-eco-fees-blames.html

  19. Jamie

    Jul 19 2010

    Stewardship ON is a little late with that plan being the fee is to be scrapped altogether:

    “The Ontario government will scrap its controversial eco fee Tuesday in a bid to quell consumer confusion and frustration from major retailers.”

    http://toronto.ctv.ca/servlet/an/local/CTVNews/20100719/ontario-eco-fee-canadian-tire-100719/20100719?hub=Toronto

  20. Buddy

    Jul 20 2010

    Just another Mcguinty blunder….that makes ….. I lost count long ago.

    I’ve been a responsible recycler for 50 years. not any more. I’ll be putting all my garbage in the regular stream and the stewards can hand sort it themselves. Can you say eHealth?

  21. Nell Johns

    Jul 22 2010

    What is Stewardship going to do with the $73 million they have stashed away. (Think Hydro and E Health)

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