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Six bins? Infrastructure Victoria’s interim waste report

Waste Management Review speaks with Infrastructure Victoria about its recent waste report and potential recycling solutions for the state.

When the Meeting of Environment Ministers agreed to ban waste exports from 1 July 2020, the Victorian Government called for an urgent national funding plan.

Environment Minister Lily D’Ambrosio requested that the Federal Government provide infrastructure investment to ensure the “fast approaching ban” did not result in stockpiling.   

Given the current status of Victoria’s untouched half-billion-dollar Sustainability Fund, some industry observers questioned the appropriateness of Ms D’Ambrosio’s request.

That said, in light of the state’s resource recovery challenges, the environment minister’s concerns were not unfounded.

Stockpile anxiety is particularly pertinent to Victoria, with DELWP figures revealing more than 100 recycling facility fires occurred in the state over the past 10 years. The largest fire cost Victoria over $110 million.

The collapse of SKM Recycling is another factor, with the state’s infrastructure capacity called into question after 33 Victorian councils were forced to landfill their recycling.

Within this context of “crisis”, the state government asked Infrastructure Victoria (IV) to examine the sector through an infrastructure lens. The task: provide advice to government on how to best support changes to resource recovery in the state.

Following extensive community and industry consultation, IV released an evidence base report in October 2019. Final advice will be provided to government in April 2020.

Despite the report’s 36 pages, mainstream media almost universally ran with one “recommendation” following its release: introducing a six-bin kerbside system.

Victorian Government Opposition Leader Michael O’Brien even told ABC radio that despite liking many of IV’s suggestions, “six bins sounds a bit novel”.

According to Elissa McNamara, IV Resource Recovery & Recycling Advice Project Director, however, IV never suggested six bins.

What IV did highlight, she says, was a link between high-performing resource recovery jurisdictions and greater household separation.

“To be clear, this report doesn’t make any recommendations. We will be making recommendations in April.

“What we have put out is potential actions and early findings for government.”

COMMINGLED MESSAGES

The Victorian Government’s stated waste policy objectives include reducing waste to landfill and minimising the impact of waste disposal on human health and the environment.

Evidence from reports commissioned by IV, however, show waste sector outcomes are falling short of these objectives.

Identified problems include steadily increasing waste generation rates, inefficient recycling data, reliance on exports, waste stockpiling and illegal dumping.

Market concentration is another problem, Elissa says, with the closure of SKM Recycling highlighting an overreliance on one company to manage Victoria’s waste.

“In Victoria, SKM had roughly 50 per cent of the kerbside commingled market, and their business model was based on exporting and minimal importing. As a result, investment in reprocessing or selling to local markets in a way that adds value was quite limited,” Elissa says.

To arrive at these and other conclusions, IV examined resource recovery approaches in other jurisdictions, and investigated potential market design solutions, infrastructure gaps and new pathways for recyclable material.

“We conducted interjurisdictional scans to assess what our neighbours are doing, importantly South Australia and NSW, but also looked at high-performing jurisdictions overseas,” Elissa says.

High-performing jurisdictions include Wales, South Korea, Germany, the United Kingdom and the Netherlands.

“There were some common lessons for Victoria underpinned by one clear theme: a proactive government,” the report reads.

In all five cases, IV identified long-term commitment, coordination and collaboration, mandatory measures from government, complementary interventions across the value chain and a range of evolving policies.

In addition to interjurisdictional scans, Elissa says IV undertook extensive market analysis.

IV engaged the University of Melbourne’s Centre for Market Design to assess incentives influencing each market transaction.

This included the effect of regulatory settings and the role of price signals and applied market design principals.

The Centre for Market Design suggests that in the “decentralised waste economy”, major decisions and transaction points are spread across the waste lifecycle.

“In the context of the Victorian waste sector, observed outcomes are determined by the interplay between the legislative and regulatory environment, on the one hand, and the decentralised, self-interested decisions of producers, consumers and processors of waste, on the other hand,” the report reads.

“In decentralised economic systems, such as the waste economy, alignment problems are common because the motivation of businesses and households does not necessarily accord with those of government.”

BEYOND THE BIN

IV is considering the types of intervention that may be needed, Elissa says, and is conscious that further government and industry collaboration is required.

“Consideration of waste infrastructure investment needs to be undertaken in the context of policy settings across the waste chain that drive behaviour change and support the development of end markets for recycled materials,” the report reads.

Among a number of potential actions, IV suggests that initiatives to disincentivise the use of virgin materials have the potential to create stronger recyclate end markets.

“Government procurement at all levels, whether that’s Commonwealth, state or local, can choose to use their procurement power to look not just at the absolute bottom line in terms of cost, but also social and environmental outcomes,” Elissa says.

She adds that it’s the choice of individual governments to decide to what extent they want to use procurement to achieve environmental outcomes, noting other mechanisms are available.

“Governments could look at other levers like taxes or a ban on virgin material, but because of trade, any mechanism like that would need to be considered by the most appropriate level of government,” Elissa says.

She says that while Victoria could tax or ban virgin material, the state government would need to consider trade implications.

“It’s also about considering whether or not the environmental and social externalities associated with virgin material extraction are being appropriately priced relative to recycled material,” she says.

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