Government inquiry discusses recycling incentives

The Federal Government’s inquiry into waste and recycling sparked a consideration of whether there are enough market incentives to encourage investment into recycling.

Following a contentious Four Corners report into the waste and recycling industry, the Federal Government announced a senate inquiry to investigate issues that emerged from the program.

It asked industry to make submissions ranging from issues related to landfill, markets for recycled waste and the role of the Federal Government in providing a coherent approach to solid waste. Public hearings were held in November 2017. In November, the senate granted an extension for the government to report on the findings until 13 June, 2018.

Waste Management Review looks at two key points in the terms of reference: the role of different incentives and collection methods to determine the quality and quantity of materials collected for recycling and the destination of material collected for recycling, including the extent of material reprocessing and stockpiling of collected material.

In public hearings, Visy, SKM Recycling, O-1 Australia, Equilibrium, the Victorian Waste Management Association and the National Waste and Recycling Industry Council all made submissions.

In its public submission, resource recovery company Visy addressed the terms of reference by noting several participants in the recycling industry have exited the market predominately as a consequence of “unviable economics”. Visy attributes this to the volatility of end markets and the rising cost of landfill, particularly in New South Wales, South Australia and Victoria. The company also pinpoints the rise of China as a market for recyclables having historically provided a “large and steady outlet” for the sale and re-use of commodities. China’s proposed ban on the importation of recyclable plastic grades and kerbside recyclables will see a glut of materials with “no home” and a lowering of commodity prices, Visy argued.

“Turning to end markets and the export volatility that we’re hearing about, a common and worrying trend across the industry is an overall decline in the commercial viability of recycling and recyclable feedstock markets globally,” Tony Monaco, Executive General Manager at Visy Recycling, told the inquiry in November.

“Most operators in the kerbside recycling industry have a heavy reliance on exporting and a large proportion of recyclable materials recovered from kerbside collections.

“Export-facing commodity sales are exposed to unavoidable volatility and financial risk. Visy is certainly uniquely positioned as it consumes, internally and domestically, 90 per cent of the mixed paper it processes from the kerbside stream.”

Visy’s public submission notes reforms are needed. These include having states and territories waive landfill levies on the disposal of residual waste from recycling operations, no landfill levies for organisations that utilise kerbside recyclable materials for raw material feedstock in further re-manufacturing and providing a “recycling bonus” for companies utilising recyclable materials. Visy also calls for local government tenders to prioritise factors that improve jobs and economic benefits from recyclables ahead of price.

“Rather than being incentivised for providing this environmentally sustainable essential service of landfill diversion, the recycling industry (as distinct from the waste disposal industry) is being penalised by being charged excessive waste levies for their disposal of residual rubbish that inadvertently ends up in the recycling stream due to householders incorrectly placing it into kerbside recycling bins,” Visy’s public submission says.

The company also calls for council recycling guidelines standardised to reduce contamination, along with standardised and consistent government-led education. This comes amid challenges to householder behaviour, with Visy noting in its submission that some householders aren’t complying with council recycling guidelines. Contaminated recyclable streams should be levied at councils, rather than recycling companies, Visy wrote. The Local Government Act or equivalent could also regulate local governments’ recyclable contamination limits in all contracts.

“Landfill costs should be levied at councils, not recycling companies; it is simply waste-shifting by householders moving the material from the waste bin to the recycling bin,” Tony Monaco told the inquiry.

The National Waste and Recycling Industry Council (NWRIC) shares some of these concerns, including the better utilisation of recyclable materials and landfill levy revenue used to support recycling.

The NWRIC has continued to advocate for landfill levy portability, which means that levies applicable should be based on where waste is generated, not where it is landfilled.

In his opening statement in the inquiry, Max Spedding, NWRIC Chief Executive Officer, highlights that waste is continuing to grow 4.5 per cent each year. By 2040, Australians will generate 138 million tonnes of solid waste per year. Assuming a future national diversion rate of 75 per cent, the industry’s recycling capacity will need to grow by 400 per cent.

EDUCATION

Speaking to Waste Management Review, Max calls for better educational programs within local government.

“If you listen to talkback radio, there will be a discussion once or twice a week about what is supposed to go in the right bin and where. There’s general confusion out there and it shouldn’t exist,” Max says.

“There really is a need for greater education to try and leave the level of contaminants down and Visy’s quite right, where this goes wrong, they end up paying for it.”

A spokesperson for the Australian Local Government Association (ALGA), which acts as an independent body for mayors, councillors and local government employees nationwide, tells Waste Management Review that local government is already bearing the cost of landfill levies in their contract price.

“It’s ALGA’s belief that if waste management companies are being hit by having to pay levies then they will pass that cost onto councils. So it’s not quite as simple as saying we’re bearing all the costs and the councils are bearing none of it,” they say.

The spokesperson says landfill levies sitting in state coffers should be returned to local government to help improve waste management services across the country.

On a question of standardising recycling guidelines, ALGA notes that council recycling capacity and markets differ across the various states and territories. It also adds that education programs are largely managed by the states and territories.

“ALGA’s view is that industry should be a partner in these recycling education programs…industry (waste generators) should be doing more to manage their waste.”   

Speaking to the inquiry, Andrew Tytherleigh, Executive Officer at Victorian Waste Management Association, argued the recovery rate of municipal solid waste needed to be improved.

“The Victorian government has targeted the removal of household organics, which comprise quite a large fraction of the material left in the bin, and has recently released a paper about waste to energy as a way of looking at addressing the residual municipal solid waste,” Andrew said.

“Both of these policies, in our view, are designed to encourage greater resource recovery and, in the latter case, to try to stimulate discussion about further investment in new technology.”

Blue Environment’s National Waste Report 2016 shows in 2014-15, Australia produced the equivalent of 565 kilograms per capita of municipal waste, 831 kilograms of construction and demolition waste, 459 kilograms of fly ash and 849 kilograms of other commercial and industrial waste. Of this, 51 per cent of municipal waste was recycled, while 57 per cent of commercial and industrial waste and 64 per cent of construction and demolition waste was recycled. The report indicates Australia is generating less municipal waste per capita and recycling more of what is generated. From 2006-07 to 2014-15, the resource recovery rate increased from 49 per cent to 58 per cent.

According to the Victorian Local Government Annual Waste Services Report 2015-16, contamination levels in the state average 5.6 per cent, down from 6 per cent in 2014-15. The report shows contamination rates have fluctuated year to year, but data valuation shows this is generally due to the accuracy of data reported by local government, as opposed to a change in contamination rates. In the National Waste Report 2016, contamination of kerbside bins is considered a problem for composters and recyclers and labelled a “significant waste management challenge”.

RECYCLING INCENTIVES

When it comes to recycling incentives to improve resource recovery, the NWRIC made a number of suggestions. Among these many suggestions were the use of landfill levy revenue to create a “recycling bank” to support new infrastructure through low interest loans.

Speaking to the inquiry, Max pointed to the Chinese National Sword policy, which ran from 1 March 2017 until 30 November 2017. Much like China’s World Trade Organization announcement, National Sword involved a restriction on the importation of scrap plastic into China and builds upon its previous Green Fence policy.

“This has been a gradual change we’ve seen over the last two years, but it’s expected to ramp up in 2017 and could have quite dramatic impacts. To solve this challenge, the council proposes that landfill levy funds be used to stimulate the creation of domestic markets for recycled materials,” Max told the inquiry.

“To further stimulate recycling, the council supports the expansion of the Emissions Reduction Fund, the ERF, to support greenhouse gas reduction initiatives, including compost, landfill gas recycling and material efficiency.”

The NWRIC also argues government procurement programs need to better utilise recycled materials, while greater support is needed for programs to develop domestic markets for recycled materials.

Looking at glass in particular, Max believes it is being recycled in greater volumes in Victoria when compared with states such as Queensland, due to the complexities of its specifications, resulting in what he classifies as loopholes.

He says Queensland’s Department of Transport and Main Roads document is much larger than Victoria’s. VicRoads’ technical note T107 provides guidance in the use of recycled materials in pavement works and is four pages long, while Queensland’s Department of Transport and Main Roads sits at 87 pages.

“What we are looking for is a greater demand for these recycled materials, but it isn’t necessarily a matter of having the Federal Government come along and say, ‘We must mandate this.’ It’s a matter of ensuring that we’ve got an environment that encourages industry to respond,” Max told the inquiry.

Alex Serpo, NWRIC Secretariat, also noted in the inquiry stockpiles of paper and plastics are a major concern, in addition to glass. When commenting on the issue of glass recycling, Alex said there is a current oversupply of glass in Australia. He explained 15 years ago most glass was recycled in Australia and there weren’t large imports of glass. Alex said it is now cheaper to produce a bottle overseas and bring it in.

“We have a real opportunity to use a lot more glass than we use now. In Victoria, the stockpile at Laverton that was in the Four Corners show has not grown in the last 10 years because one company, Alex Fraser, take about 150,000 to 200,000 tonnes of broken glass a year. They crush it and they include it in their asphalt and in their road-based material,” Max said.

Speaking to the inquiry, Andrew argued that a key driver for governments, given their large purchases of goods and services, would be to mandate minimum quantities of recycled materials in their purchasing policies.

“As state and local governments and the Commonwealth are large consumers of these goods and services, this would underpin what I mean about creating market demand,” he said.

“The general view from my experience of waste policies, and this applies to them all, is that they still focus very much on the front end of recycling and not enough on market development – the pull-through, if you like, of creating policies that create a demand, which creates investment by the private sector.”