Part I — Situation overview

At its sitting of 3 September 2026 the Government decided to review the entire waste management system. At the government spokesperson’s briefing the Prime Minister presented the result of the first screening: the holder of the concession, MOHU Mol Hulladékgazdálkodási Zrt., is failing to fulfil, or is not properly fulfilling, the obligations it undertook in the contract, and the system is not operating in accordance with the objectives set. According to the announcement, it costs Hungary some 90 billion forints a year that it does not comply with EU recycling expectations, and instead of the municipal recycling rate of at least 50 per cent undertaken for 2025, not even 36 per cent has been reached. Of the contract concluded for 35 years the head of government said it was “strict, but not holy writ”, and announced that the system would be renegotiated with MOHU. At the same briefing it was said that the cabinet would also review the casino and tobacco concessions in their entirety, weighing even the termination of the existing contracts, and would abolish the right of veto of the Supervisory Authority for Regulated Activities — indeed, the abolition of the authority itself was also raised. In addition, it would set up a new environmental protection authority, with the fine that may be imposed raised to five billion forints. MOHU stated the same day that it agreed the complex system of the concession needs to be rethought.

The decision did not come out of nowhere, nor did it ripen in a single day. The Hungarian state concluded the 35-year concession contract in 2022, and the system started in 2023. The Government had already ordered the review by resolution in June, with a deadline of 1 September, under the leadership of the environment ministry; the screening was carried out by a ten-member team headed by a state secretary. Meanwhile, operational disruptions have occurred one after another in recent months: in the capital, paper waste collections were missed for weeks in several districts, in Komárom-Esztergom county separate and green waste collections were missed, in Szolnok relations between the locally majority-owned service provider and the concessionaire sharpened, and in August a regional rerouting caused disruption, for the settlement of which the minister called upon the company in a separate letter. The tensions surrounding bottle return were raised by several Budapest district mayors and by the Lord Mayor as well; the concessionaire proposed phasing out cash payment, while according to the director-general of the Lord Mayor’s Office this would only create a secondary voucher market, and it would be better to increase the number of machines and deposit slots.

MIAK’s reading: the waste concession is a textbook example of what MIAK calls rent-seeking — that is, when a market player obtains income not through better performance but from an exclusive position deriving from state protection. The direction of the review now announced is right, but its framing is risky. The answer “I would nationalise the lot” is not structural reform: swapping one monopoly for another does not abolish the monopoly, it merely rewrites its owner. The substantive question is what is missing from the present contract: a measurable performance target, an automatic consequence for non-delivery, and data available in time from which both can be verified. This yardstick applies not only to the current concessionaire but to every future operator — including a state-owned one.

Part II — Foundations in the literature

The interpretive frame is given by three sources. In The Wealth of Nations by Adam Smith (eighteenth-century Scottish philosopher and economist, the founder of modern economics), the discussions of companies enjoying exclusive privileges are the earliest systematic argument that exclusivity in itself degrades performance, because it removes competitive pressure while the holder of the exclusive right may be both buyer and seller in its own market. The Evolution of Institutions for Collective Action by Elinor Ostrom (American political scientist, Nobel Memorial Prize laureate in economics, researcher of the governance of common-pool resources) shows that enduringly functioning resource systems do not turn on the choice between “state or market”, but on whether monitoring and sanctioning have been solved — for her these are not incidental administrative elements but essential parts of the institution. And 23 Things They Don’t Tell You About Capitalism by Ha-Joon Chang (South Korean-born economist, former lecturer at the University of Cambridge) dismantles the false alternative that reduces the debate to a question of ownership: in his view the degree of market freedom is always a matter of political definition, so the real decision is not “state or market” but what rules we prescribe. Together the three sources lead to the same place: the problem of the waste concession is not the identity of the owner but the structure of the contract. The detailed treatment of the literature — author by author, with quotations — can be found in section 6.4 Literature in detail.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable measures. The starting point is that the review is warranted: according to the available data the system is meeting neither the environmental objectives, nor the service quality, nor the financial sustainability requirements. The proposals therefore do not speak against the review, but for its content.

3.1 A public performance yardstick and an automatic sanction mechanism in the contract (by the close of the renegotiation)

The renewed contract — whether concluded with the current concessionaire, with another party, or with a state service provider — should contain at most six easily measurable performance indicators published quarterly. The suggested set: the rate of material recycling of municipal waste, the share of waste going to landfill, the share of operational return machines relative to all installed ones, collection point density by settlement type, the share of missed collections and the average time taken to deal with a residential complaint. Each should have an annual target value and an automatic contractual penalty applied without discretion for non-delivery — that is, the sanction should not be the subject of a separate deal, an official procedure or a political announcement, but should follow from the contract. Ostrom’s design principles (see 6.4.2) are directly applicable here: a graduated sanction works if it is predictable and cheap to enforce. This is the joint concretisation of MIAK’s programme points K4 (Promoting the circular economy) and G6 (Programme against rent-seeking and regulatory capture).

3.2 Shortening the delay in publishing waste data to twelve months (from the next data year)

Public debate today is distorted for a structural reason: waste management data are currently available only up to 2024, because the validation time is nineteen months relative to the close of the financial year, and the concessionaire’s publication obligation kicks in with a lag of almost two years. The contracting state and the public thus learn about the performance of a 35-year contract with a regular two-year delay — meaning that any correction can only start two years after the problem. MIAK proposes shortening the validation and publication deadline to twelve months, and introducing a preliminary quarterly flash report on the key indicators. The data in the flash report may be provisional and refined later — this is standard statistical practice — but the order of magnitude has to be visible in time. The proposal carries forward the logic of K3 (Pollution monitoring) and A2 (Public procurement transparency): data are an instrument of control only if they are available at the time of the decision.

3.3 The cash branch of bottle return should remain, and capacity should expand (before the winter season)

The concessionaire’s proposal to phase out cash payment and switch to a voucher system points in the wrong direction in MIAK’s view. There are three reasons. One: for low-income households that supplement their income from returns, a voucher is worth substantially less than cash, so the step is regressive — it affects most acutely those who have the least room for manoeuvre. Two: the voucher will almost certainly create a secondary market where vouchers are passed on below face value, meaning the system does not eliminate the underlying social situation, it merely builds an intermediary layer on top of it. Three: in the causal chain of the public cleanliness and public safety problems flagged by the districts of the capital — overturned bins, forced apartment-block doors — it is not cash that stands, but the scarcity of collection capacity and the monetary value of the waste; the latter persists under a voucher system too. Instead, MIAK proposes a measurable expansion of the number of return points and deposit slots, with target figures broken down by district, together with the settlement of the additional costs arising at local authorities. An important point of competence: a local authority is not a subordinate organ of the Government but a public-power actor directed by an independent, elected body — an arrangement affecting local tasks must be a negotiated agreement, not an instruction. The relevant programme point is K4, and from the side of territorial equalisation, TE2.

The three measures are bound together by a single principle: the price of exclusivity is measurability. If a service provider receives an exclusive right for 35 years to a public task covering an entire country, then in return the contract must oblige it not to business secrecy but to stricter-than-usual accounting. This yardstick applies equally to the current and to future operators — and precisely for that reason nationalisation on its own solves nothing: a state service provider operating in the same exclusive position, without the same yardstick, will end up in the same place. Chang’s proposition (see 6.4.3) is exactly this: the question is never whether there is regulation, but what kind.

Part IV — Expected effects and risks

Dimension Expected effect Risk
Environment The measurable target figure and the automatic penalty steer the operator towards a reduction in the landfill rate, which moderates exposure to EU fines Short-term target compliance can also be achieved by improving data reporting without any real change in material flows — the indicators must be authenticated by independent verification
Economy A transparent fee and performance structure improves predictability for the supplier (subcontractor) circle Stricter penalties alongside the present loss-making operation may lead to a curtailment of the service — the yardstick must be introduced together with a review of the fee structure
Local government District-level collection point targets and the settlement of additional costs reduce local tensions Under a central prescription issued without consultation, implementation falters: a local authority is an independent actor, not a link in a chain of execution
Social impact Keeping the cash branch does not eliminate, but neither does it aggravate, the collecting practice arising from deep poverty Handling the question without social policy instruments shifts it permanently to the public cleanliness and policing field, where it cannot be solved

The main question for consideration is the financial balance of the contract. According to the available accounts data, the operation generates substantial losses: in 2025 revenue grew from 379.2 billion forints to 431.7 billion, while the after-tax loss fell only from 50.4 billion to 47.8 billion, and the accounts themselves record that the official fee is unable to finance the present cost level. The problem therefore cannot be solved by stricter penalties alone: if the operator cannot meet the target figures out of the contractual fee, then non-delivery follows not from negligence but from a financing shortfall, and the sanction merely increases the loss. MIAK’s proposal is therefore two-sided: alongside the stricter performance yardstick a public review of the fee structure is also needed, showing how much reaching the undertaken target figures costs — and this figure has to be put before the public before either party talks about a question of ownership. The proposal tips to the risk side if the introduction of the yardstick precedes the settlement of the financing.

Part V — Measurability and summary

5.1 What is worth following? (suggested KPIs)

The performance indicators (KPIs) below will show over twelve to thirty-six months whether the review was a substantive change of system.

  • Rate of material recycling of municipal waste: the latest known value is 33.6 per cent (2024); a suggested interim target of 40 per cent by 2028, moving towards the EU target values currently in force.
  • Landfill rate: the latest known value is 53.2 per cent (2024); a suggested interim target below 45 per cent by 2029.
  • Share of operational return machines: the suggested target is a monthly average availability above 95 per cent of the installed stock, published by district and county.
  • Data publication delay: the number of months between the close of the data year and the official data release — a suggested target below 12 months, supplemented by a quarterly flash report.
  • EU non-compliance exposure: the order of magnitude of the annual payment obligation arising from the recycling shortfall, published annually.

5.2 Summary

MIAK’s request in a single sentence: at the end of the review the outcome should not be a decision about ownership, but a contractual performance yardstick, automatic sanctions and a short data cycle — and the review report should be made public so that anyone can verify how well founded the yardstick is. Waste management is a good test of the governmental method because here every actor agrees that the present state of affairs is bad: the population, the local authorities, the subcontractors, the professional organisations and the concessionaire itself. Given such rare agreement, the quality of the reform depends not on intent but on the details.

Two MIAK foundational values are in play here. Data-drivenness, because in today’s debate the freshest official data are two years old — and a 35-year contract cannot be steered with feedback delayed by two years; the quality of the decision here depends directly on the freshness of the data. And being ideology-free, because the natural political framing of the question — nationalisation versus private operation — diverts attention from precisely the essential point. MIAK does not regard either form of ownership as a solution in itself; it demands the yardstick, whoever operates the system.

Part VI — Reasoning and further sources

6.1 The framing of the press by spectrum

The liberal-left band approached the matter from the side of the system failure. Telex gave a substantive reconstruction of the government spokesperson’s briefing, emphasising the shortfall against the target figures and the mass of complaints. 444.hu carried the announcement in a short news item, but with its related materials pointed to the economic structure of the concession, including the fee mechanism of bottle return. HVG processed the day in two separate pieces: one followed the government briefing as a whole, the other — “The waste concession is nothing but a burden to everyone, and after three years of Mohu the figures are still dismal” — collected the accessible statistical and accounts data, and thus provided the day’s most detailed data-based treatment. This band shows the review to be warranted, but takes no position on the ownership question.

The public affairs band highlighted the local and the social thread. ATV reconstructed how the case travelled from the ever sharper criticism of district mayors to the government announcement, and quoted in detail the positions of the Józsefváros, Terézváros and city leaders. 24.hu carried the other half of the same thread: the capital’s response to the concessionaire’s proposal to phase out cash, with the argument that a voucher solution would create a secondary market. This band is the only one that dealt substantively with the social layer of the question.

The economic band remained event-focused: Portfolio published the concessionaire’s reaction and noted that the sector is loss-making under the present construction — that is, the review is in the interest of the other party too.

The pro-government and conservative band focused on the political edge of the announcement. Magyar Nemzet put the ownership question in the focus of the news under the headline “Péter Magyar would nationalise tobacco shops, the Government is negotiating on the concessions”. Mandiner set out item by item the plans affecting the concession system, including the abolition of the supervisory authority’s veto right and the possible winding up of the authority, as well as the shortfall against the waste management target figures — that is, it took over the facts, but in its framing emphasised the risks of a radical restructuring of the system.

The most important difference between the bands is that the financial side of waste management — the loss-making operation and the owner’s capital injections — was substantively discussed only in one piece each from the economic and the liberal-left band. Without this, public debate treats the performance question as a moral question, whereas non-delivery is in part of financing origin.

6.2 Facts and data

Indicator Value Note
Municipal waste recycling rate 33.4% (2023), 33.6% (2024) EU average 48.1%; the target prescribed for 2025 was 55%
Earlier level of the rate 37% (2018–19) according to the European Commission’s 2026 country report the rate has not grown substantially since 2018
Recycling of packaging waste 42.8% (2023) the target prescribed for the end of 2025 is 65%
Recycling of plastic packaging 23% (2023) EU average 42.1%; the target for 2025 was 50%
Quantity recycled in material terms 1.37 → 1.33 million tonnes decline
Landfill rate 54.2% → 53.2% (2023→2024) the integrated report of the concessionaire’s parent company gives values of 49.5% → 47.3%
Packaging returned more than 3 billion units (2025) at a return rate of 88.8 per cent
Concessionaire’s revenue 379.2 → 431.7 billion HUF (2025) +13.8%
After-tax loss 50.4 → 47.8 billion HUF (2025) the loss of the residential public service alone is 69.5 billion HUF
Owner’s capital injection 30 (2023) + 60 (2024) + 16.6 billion HUF (2026) from the parent company
Annual payment obligation due to EU non-compliance approx. 90 billion HUF (2025) according to the government announcement, expected to be higher in 2026

Two data points deserve special attention. One is the duality of the landfill rate: the official statistics and the integrated report of the operator’s parent company give different values for the same indicator — this in itself justifies prescribing a uniform, authenticated methodology. The other is the absence of a change of direction: the quantity recycled in material terms declined in absolute value, while the EU expectation is precisely its increase. The official aim of the concession was to bring Hungary closer to the EU target values; according to the available data this effect cannot be demonstrated after three years.

6.3 Policy dimensions

  • Environment and climate (programme points) — the contractual translation of circular economy target figures and real-time monitoring (programme point ID: K4, K3);
  • Economy (programme points) — eliminating the rent arising from exclusive market positions and reviewing barriers to market entry in the casino and tobacco concessions too (programme point ID: G5, G6);
  • Public administration and e-government (programme points) — contractual performance measurement and the data cycle as a question of administrative efficiency (programme point ID: KI8);
  • Territorial inequality and rural policy (programme points) — measuring collection point density by settlement type, so that service quality is not a function of settlement size (programme point ID: TE2).

6.4 Literature in detail

6.4.1 Adam Smith: The Wealth of Nations

In his discussions of trading companies enjoying exclusive privileges, Smith gives not a moral but a structural argument. In his view such a company, which simultaneously holds the exclusive right of purchase and of supply, “not only had the power to oppress them, but the greatest temptation to do so” — that is, the abuse is a consequence not of the character of the actors but of the set-up. From this he derives the blunt verdict still valid today: “the government of an exclusive company of merchants is, perhaps, the worst of all governments for any country whatever.” Smith is here criticising not private property but exclusivity: for him a monopoly created by state licence and a state monopoly belong to the same category, because both lack the same thing — the constraint of performance. In the case of the Hungarian waste concession this distinction is the key to the debate: the problem of a 35-year exclusivity granted without competitive tender is not solved by changing the owner of the right-holder, if exclusivity is still not accompanied by measurable expectations and consequences.

📖 Source: Adam Smith: The Wealth of Nations

6.4.2 Elinor Ostrom: The Evolution of Institutions for Collective Action

The central claim of Ostrom’s research is that the proposition according to which, for common-pool resources, “the problem of overuse can be solved by privatisation or externally enforced regulation” is a false exclusivity: in reality enduringly functioning self-governing institutions also exist, provided “that certain problems of supply, credibility and monitoring are solved”. For her, monitoring and sanctioning are not administrative appendages but structural elements of the institution: where participants cannot see one another’s performance, “everyone must expect that the others will also behave opportunistically whenever they get the chance”, and in such an environment “costly monitoring and sanctioning mechanisms may be needed”. What Ostrom’s examples — from Japanese and Swiss mountain pastures to Californian water management — have in common is that they make compliance with the rules cheap to verify and visibly fair to the participants. From the point of view of the Hungarian waste system this yields two concrete conclusions. One is that a contractual target figure is worth nothing on its own if the data arrive with a two-year delay — monitoring then exists formally but not in practice. The other is that the sanction must be graduated and automatic: the single final instrument that can be deployed only rarely and on the basis of a political decision — termination of the contract — is unusable in practice, and therefore does not discipline either.

📖 Source: Elinor Ostrom: The Evolution of Institutions for Collective Action

6.4.3 Ha-Joon Chang: 23 Things They Don’t Tell You About Capitalism

The first thesis of Chang’s book is directly about the fact that the concept of the free market is not a neutral starting point. As he puts it, “the market looks free only because we so unconditionally accept its underlying restrictions that we fail to see them”, and from this follows his most debated claim to this day: “how ‘free’ a market is cannot be objectively defined. It is a political definition.” Chang is not arguing against the market but criticising the structure of the debate: whoever claims to be merely protecting the market from intervention is in fact also voting for a set of rules, only not calling it that. In the Hungarian debate on the waste concession this argument is the most precise antidote to the ownership framing. Neither the present construction nor nationalisation is a “market” or “non-market” solution in itself: both are ensembles of rules, and the difference lies in who may measure what, and with what consequence. The same yardstick can be applied to the casino and tobacco concessions, where the actual question is not one of ownership but of market entry: why is there a closed, licence-bound circle at all, and what public policy purpose does it serve?

📖 Source: Ha-Joon Chang: 23 Things They Don’t Tell You About Capitalism

6.5 International comparison

The best-performing waste management systems in Europe differ from the Hungarian one not in their ownership model but in their contractual discipline. Extended producer responsibility — the principle that the producer of the packaging bears the cost of it becoming waste — is the common basis of EU regulation, but the quality of implementation depends on to whom and against what the performance of the organisation operating the system is measured. Where producer responsibility organisations operate not in a monopoly position but as several licensed actors in parallel, the authority has a basis for comparison; where a single actor operates, the comparison has to be substituted by target values written into the contract. The Hungarian system currently belongs to the second type, but without the guarantees belonging to the second type.

The international experience of return systems is unambiguously positive on the quantitative side: the deposit model achieves a high return rate everywhere, typically between 85 and 95 per cent, and in this respect the Hungarian value of 88.8 per cent is good by international comparison. The difference lies in access: in well-functioning systems the density and availability of return points is itself a regulated indicator, not the free discretion of the operator. The Hungarian experience — machines out of order and loads that differ from one part of the city to another — shows precisely the absence of this, and this is the point where Ostrom’s monitoring principle can be translated into a practical regulatory requirement.

Environment and climate

  • K3 — Pollution monitoring
  • K4 — Promoting the circular economy

Economy

  • G5 — Competition policy and anti-monopoly
  • G6 — Programme against rent-seeking and regulatory capture

Transparency and anti-corruption policy

  • A2 — Public procurement transparency

Public administration and e-government

  • KI8 — Drucker-style efficiency measurement in public administration

Territorial inequality and rural policy

  • TE2 — Data-based allocation of EU cohesion funds

Suggested new programme point: Concession performance yardstick and automatic sanction mechanism — for the Economy policy area: every concession contract granting an exclusive right for longer than ten years should contain public target figures and a contractual penalty applied without discretion.

6.7 List of sources

Press sources (MIAK press monitor, 4 September 2026 — topic 4):

Knowledge base references (specialist books):

  • 📖 Adam Smith: The Wealth of Nations
  • 📖 Elinor Ostrom: The Evolution of Institutions for Collective Action
  • 📖 Ha-Joon Chang: 23 Things They Don’t Tell You About Capitalism

MIAK internal materials:

  • MIAK policy area: Environment and climate (programme points; programme point ID: K3, K4)
  • MIAK policy area: Economy (programme points; programme point ID: G5, G6)
  • MIAK policy area: Transparency and anti-corruption policy (programme points; programme point ID: A2)
  • MIAK policy area: Public administration and e-government (programme points; programme point ID: KI8)
  • MIAK policy area: Territorial inequality and rural policy (programme points; programme point ID: TE2)
  • MIAK press monitor, 4 September 2026 — topic 4, score: 88/100

Supplementary public data sources:

  • Eurostat waste and packaging waste statistics
  • Waste management data series of the Hungarian Central Statistical Office
  • The European Commission’s 2026 country report on Hungary
  • The annual and integrated reports of the company operating the concession and of its parent company

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