The price of recycling

Is the current landfill levy system supercharging or stymying recycling? Industry consultants present their views on the somewhat polarising issue. 

Between 1996 and 2015, waste grew at a compound rate of 7.8 per cent per annum, according to estimations by MRA Consulting Group based on the Federal Government’s National Waste Policy 2010 and more recent data.

The government’s report into the nation’s waste generation and resource recovery found that Australians generated 2.2 tonnes of waste per capita on average in 2010-11, with 60 per cent of this recycled or recovered for embodied energy.

With landfill being the cheapest option, recycling incentives have been put in place in various states and territories in the form of a landfill levy. The levies require landfill licence holders to pay a fee for each tonne of waste deposited onto land at licenced premises.

But numerous issues have emerged out of the policy.

These include stockpiling to avoid paying the levy and a lack of harmony among the states, which is believed to disincentivise recycling projects.
New South Wales, Victoria, South Australia and Western Australia have all implemented levies, while Queensland, the Northern Territory and Tasmania have not.

According to the Environmental Protection Authority (EPA) Victoria’s Calculating the landfill levy and recycling rebates document, the levies act as an incentive to minimise the generation of waste and to promote investment in developing alternatives to disposal to landfill.

Mike Ritchie, Director of MRA Consulting Group, notes in his research that the landfill levy has encouraged recycling.

He argues that after the Queensland Government removed its landfill levy in 2014, recycling rates were immediately reduced by 15 per cent.

Mike’s research shows that over the same 18-month period, recycling rates in NSW increased by 16 per cent. At the same time, Mike notes that most state governments have set landfill diversion targets for various waste streams, ranging between 60 to 90 per cent by 2021.

“We are still a long way from achieving each state government’s recycling targets.

“Further intervention via levies or other instruments such as bans, grants and regulation is required,” wrote Mike.

“One of the main frustrations of the waste sector is that plenty of new recycling/recovery technology is available and the sector has the appetite for capital investment, but the main barrier remains government willingness to shift market economics.”

Max Spedding, CEO of the National Waste and Recycling Industry Council, told Waste Management Review that landfill levies need to be appropriately priced to ensure outcomes.

“We’ve got the situation where we’ve got no levy in Queensland and a very high levy in Sydney and that’s resulting in waste being carted from Sydney and disposed of in Queensland,” Max says.

“When the levy was removed in Queensland by Newman’s government the recycling industry collapsed overnight. Numerous facilities were closed within the change of legislation.” Max says that a high levy also could also be counterproductive, adding that generators could avoid recycling all together.

“If you’ve got a particular stream that has high residuals, such as shredder floc from vehicle recycling, the cost of the disposal of the residual waste doesn’t make economic sense. If you’re selling into the international market, you’re competitors are from other countries, especially Asia and America, where there are no levies, you’re put at a disadvantage.

“It means they won’t recycle that material and give preference to another that doesn’t have that high degree of residual in it. That makes it more difficult to dispose of different waste streams that have the residual waste,” Max explains.

“We’re looking to create a levy structure which encourages industry to invest into recycling. Currently, the NSW EPA applies a 50 per cent reduction on the metal industry, which we welcome.”

Former ResourceCo executive and independent industry consultant Mike Haywood argues the current practice of passing on levies to governments has led to stockpiling and even illegal dumping to avoid paying the levy.

“It’s pretty hard to argue that levies haven’t been successful at diverting waste from landfill. But have we just achieved the diversion of landfill part? Have we actually really achieved the beneficial reuse and recovery aspect of it?” Mike asks.

“Due to the way the levy is applied and collected by the landfill operator or depot it is not in their interest to transfer to the landfill as that will trigger the payment of the levy. Therefore if you stockpile waste you get to keep the cash, so the current system goes towards encouraging stockpiling.”

Mike says that state governments should collect the levy instead of the private sector and local government.

“What should happen is that the levy is paid direct to treasury and the recycler has to recycle the material in an EPA-approved process and distribute the commodities or products to either processing facilities or produce products to be able to claim back the levies from treasury.”

A South Australian EPA spokesperson said the Government’s reform to the waste and resource recovery sector, including changes to the waste levy, was designed and independently modelled to grow the sector.

“There is no evidence to suggest illegal dumping is related to people wanting to avoid a waste levy. In Queensland for instance, there is no waste levy for householders, and yet they report cases of illegal dumping in their community.”

To read more, see page 36 of Issue 12.