New leap in investment
In a continuing context of economic slowdown, the revenue for municipalities is not increasing very much compared to the years of growth which lasted until 2013.
After several years of near stagnation, the operating expenditure of municipalities rose in 2017 (+2.9% compared to 2016, against +1.3% on average between 2014 and 2016). This increase is undoubtedly a sign of their difficulty in maintaining the effort to control expenses over the long term, especially for municipalities experiencing significant population growth.
Overall, the savings of New Caledonian municipalities were eroded in 2017 (gross savings stood at FCFP 8.9bn, against FCFP 9.7bn in 2016). These savings do, however, remain sufficiently high to finance part of their investments.
In 2017, investment gathered pace with a total amount of FCFP 18.9bn, against FCFP 16.3bn in 2016, i.e. an increase of FCFP 2.6bn. This increase illustrates the role played by municipalities as a central actor in the economy and local public sector and their commitment to maintaining high-quality facilities.
While municipalities had mainly had recourse to their reserves and grants in the previous years, they borrowed more in 2017.
Borrowing, which accounted for 25% of investment income, against 13% in 2016, does, however, remained controlled and sustainable. This situation makes it possible to maintain a good solvency ratio, although this general observation should not mask certain specific tighter situations.
However, the analysis of the water, sanitation and waste budgets (the “subsidiary” budgets), which entail major investments, calls for the apparent improvement in the finances of certain municipalities to be put into perspective.
Focus on waste management
The second part of the publication is devoted to a crosscutting theme: household waste management. It was produced with ADEME, together with local public actors. It shows the difficulties that municipalities have in financing this essential public service, but also the progress achieved in New Caledonia over the past decade.
Over the last ten years, New Caledonian municipalities, which are in the front line for waste management, have switched from a relatively simple management method, i.e. under their own control, with basic disposal in non-regulated dumps, to the general implementation of door-to-door collection with disposal in non-hazardous waste storage facilities (NHWSF or WSF), sometimes with complex set-ups.
The amount of household waste produced currently stands at over 100,000 tons (2017). This major development in the sector, which involves many actors, has also come about thanks to the policies implemented by the provinces, via their waste prevention and management schemes.
The Observatory (available in French) also highlights field experiences: the termination of the collection of organic waste in Pouébo, the periodic provision of collection facilities (“mini-waste collection point” operations by SIVM Sud), composting mutually managed by the Gohapin tribe in Poya and a focus on another territory: a mobile sorting chain in Saint Pierre and Miquelon.
Difficult to meet the obligation to achieve a balance
Pursuant to Article L322-1 of the Code of New Caledonian Municipalities, waste management, water supply and sanitation, as industrial and commercial public services (SPIC), are required to achieve financial autonomy.
But this obligation to achieve a balance in the waste budget has up until now been difficult to meet. Indeed, the balance depends on the amount of the fees collected from users.
According to the available data for 2017, balancing the subsidiary waste budget would require an average annual fee amount per household of between FCFP 35,000 and FCFP 45,000.
In 2017, only three municipalities achieved this fee level and balanced their budgets. In contrast, the vast majority of municipalities apply a fee of below FCFP 15,000.
The issue of unpaid fees, which is becoming increasingly important, could also in the short term become a major challenge for the financial health of municipalities, all budgets taken together.
Towards a ban on single-use plastics?
Although municipalities are at the forefront for waste management, the partnership with the provinces and New Caledonia, which, for their part, are working on reducing waste production, needs to be continued.
Finally, the extension of the scope of the lines of Extended Producer Responsibility (EPR polluter pays principle) and the ban on marketing single-use plastics are examples of measures that can contribute to reducing waste production and more sustainable waste management.