Looking into a later levy

Looking into a later levy

Waste Management Review examines some of the reasons why the Queensland Government’s waste levy was pushed back to 1 July 2019 and what it means for the industry going forward.

When the Queensland Government introduced legislation to create a waste levy, it aimed to stop the state from becoming a “dumping ground” for interstate waste.

According to the state government, of the approximated 5.5 million tonnes of waste that was sent to landfill in 2016-17, almost a million was from other states. 

Starting at $70 a tonne, the aim of the levy is to remove incentives for transporting waste across state lines and use the funding to support councils and the waste industry.

Queensland had a levy, but it was scrapped in 2012 by the Newman Government, making Queensland the only mainland state without one.

Environment Minister Leeanne Enoch said the levy would provide advance payments to cover 105 per cent of the cost of their municipal waste, using $32 million from the 2018-19 budget to ensure councils wouldn’t have to pay more for their waste. 

Originally slated to begin on 4 March 2019, by October calls had come from the local government sector pushing to move the implementation of the legislation back to 1 July 2019. By the next month, the Queensland Government announced the levy would be moved to this new date.

Waste Management Review investigates some of the reasons behind the changes to the levy and what they mean for local councils and the industry.

COUNCIL CHALLENGES

Lyn McLaughlin, North Queensland Regional Organisation of Councils (NQROC) Chair, says one of the major reasons why councils needed more time is because the original levy implementation dates gave councils no time to review their annual budgets to account for it.

“When the news broke, last year’s budgets had already been completed, meaning there was very little flexibility to figure out the financial side of things.” 

By moving the start date back, the increment dates and starting price were changed to avoid falling behind the other states, now set to begin at $75 per tonne.

A majority of Queensland’s population is located within the south-east of the state, meaning many councils have been able to benefit from economies of scale and construct resource recovery and recycling facilities.

Councils located further north within the state tend to have much smaller populations and less access to recycling infrastructure. 

Lyn says this distance from recycling markets is one of the hidden costs of the levy for regional councils.

“Transportation costs are a huge issue for regional and rural communities,” she says. 

“A lot of this material can only be recycled within the south-east, meaning all regional councils will need to face the transportation costs.

“Ideally, we’d like to see a processing facility closer to the regions, but until we understand the plans of the state government and how they’re looking to spend the levy funding, we can’t go forward.”

Around 90 per cent of Queensland’s population is within the drafted levy zone, with 39 out of 77 local government areas included within the legislation.

However, regional economies are often complex when it comes to population. 

For example, the Charters Towers Regional Council has a large number of rural properties across an area equivalent to Tasmania and provides waste services for less than the actual population.

One recommendation NQROC submitted to the state government was to implement a differential levy rate system, to account for the differences between the metropolitan and regional areas, similar to how Victoria and NSW implemented their levies.

Lyn adds there is still some confusion for councils around the specific levy exemptions and discounts along with the set fees for transfer stations.

“Our regional group needs to know exactly what will be involved and if there will be any funding available to support us if hidden costs arise,” she says.

“For example, if there is $6 million available in funding, will councils further away from the recycling infrastructure be eligible for a larger subsidy?”

A spokesperson for the Department of Environment and Science (DES) said the state government has grants available to support councils, business and the community, which includes regional transport assistance programs, levy ready grants and the $100 million Resource Recovery Industry Development Program.

Some of the wastes exempt from the levy have been announced, and include those resulting from a declared disaster, such as a cyclone, bushfire or floods, or litter illegally dumped and collected by governments and councils.

“By deferring the start date, it has given both state and local governments time to find the best method of implementing the levy,” Lyn says.

“I think it is excellent that the government is listening to us and working with regional councils to help overcome the issues we face.”

INDUSTRY ISSUES

Around the time the levy was announced, the Queensland Government revealed it was developing a comprehensive strategy underpinned by a waste levy to increase recycling and create jobs. It introduced new performance targets which aim to see only 20 per cent of avoidable waste sent to landfill by 2030, dropping to zero by 2050.

To achieve these new targets, the regulatory framework plans to implement landfill disposal bans, adopt product stewardship schemes where national action fails, explore potential waste-to-energy methods and develop a monitoring system underpinned by a comprehensive waste database.

Waste and Recycling Industry Queensland (WRIQ) CEO Rick Ralph says the original implementation of the new regulatory reform was planned to be introduced in the middle of 2018 but was delayed to December and eventually pushed back to coincide with the beginning of the levy on July 1.

Rick says WRIQ strongly urged the Queensland Government to ensure the new framework was installed at least 12 months before the levy so government and industry can reach the level on equal footing.

“Because the regulatory framework will be implemented at the start of levy, unlicensed activity in Queensland is able to trade openly against licensed companies which is unfair as they have strict requirements placed on them,” he says.

“If you are going to bring about reform, everyone needs to be on the same page. Pushing the levy back gives the governments more time to prepare, but it doesn’t fix the fact there is a fundamental structural disconnect between the legislation and the industry.”

In late 2018, WRIQ commissioned its first annual review of the performance of the industry regulator, the DES, and the effectiveness of the Environmental Services and Regulation Division (ESR). As part of the review, WRIQ outlined a roadmap for DES performance improvement to support the regulator.

The review found that 64 per cent of the industry reported the regulator was working against the industry, with 18 per cent reporting it had no real impact and a further 18 per cent reporting it is supportive of the industry.

On top of this, almost three in five survey respondents believed the ESR’s approach is reducing economic growth and job creation. As part of an overall assessment of the ESR, 30 per cent of survey respondents rated its performance as poor and 55 per cent rated its performance as average, with only 15 per cent of the survey respondents rating it as good or very good.

In particular, the ESR’s performance was rated lowest in areas of assistance with problem solving (85.4 per cent), stopping illegal dumping or unregulated operations (85.4 per cent) and providing leadership and direction. 

“They spend more time trying to fine licensed operators for breaches, instead of closing down unlicensed operators,” one survey respondent said.

WRIQ highlights improving consultation with the industry, fostering collaboration and engagement and setting clear goals, targets and expectations as potential methods for the department to improve. 

In particular, it recommends targeting unlicensed operators, improve response times and to be independent of politics.

“We have always advocated that to have the right policy, we need the right regulatory settings,” Rick says.

“Right now, it’s clear from the statistics that the regulatory settings needs an overhaul, with action and accountability from the state government to make sure positive change can happen.”

WRIQ has presented the Queensland Government with a 10-point action plan to provide steps to improve how the industry is regulated. 

The plan calls for an independent third party to review the current system and to assess the necessity of an independent Environmental Protection Authority. 

“We’re looking to the future and acknowledge the work the government has done thus far to genuinely create a better system,” Rick says.

“We’re hoping to build a level of trust between the private sector and the government that is seriously waning at the moment. 

“We need certainty for the industry and need a new model to ensure that everyone is doing the right thing.” 

A DES spokesperson says the Queensland Government is committed to improving the relationship between industry and the regulator for the benefit of all Queenslanders.

“DES has clear expectations about acceptable standards of environmental performance, as well as published easy-to-understand guidance material and information to assist operators to meet their environmental obligations,” the spokesperson said.

“The draft regulatory framework includes provisions to support and sustain recycling activities in Queensland, such as discounts from the waste levy for residue waste from recycling activities. 

“The Queensland Government have committed that 70 per cent of revenue raised from the waste levy will go back to councils, the waste industry, scheme start-up and environmental programs.”

This article was published in the March issue of Waste Management Review. 

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