Victoria in the midst of a waste crisis: Broad scale reform recommended - Waste Management

Introduction

The Legislative Council's Environment and Planning Committee (Committee) has released, and tabled in Parliament, a detailed report into Victoria's recycling and waste management crisis.

The Inquiry into Recycling and Waste Management – Final Report (Report) follows a seven month investigation by the Committee who reviewed 701 submissions and heard from 135 witnesses. The investigation has culminated in 33 findings and 46 recommendations that, if adopted, would see Victoria's waste management system significantly overhauled.

Victoria's Waste Crisis

The Report identifies that Victoria is in the middle of a waste crisis evidenced by:

the large amount of recyclable material being redirected to landfill;
the stockpiling of a significant amount of recyclable materials awaiting a solution to the lack of recycling facilities; and
the occurrence (and continuing threat) of fires at recycling facilities over-stockpiling material.

While the Report acknowledges the triggering role China's policy shift on importing certain recycling material had on the crisis being faced by Victoria's recycling industry, it also identified other contributing factors to the current state of crisis, including:

A failure at all levels of government to understand or prepare for the impacts of the changes to China's National Sword policy on Victoria's recycling industry; and
The failure of the government to undertake sufficient oversight of the recycling and waste management systems in Victoria.

The Report also highlights that the limited number of companies participating in the recycling industry in Victoria, and an over reliance on a single company (SKM) to process over 50% of Victoria's recycling, exposed Victoria to significant risk from market fluctuations and changes.

Key Findings and Recommendations

The Committee made a number of findings and recommendations. Those likely to have the most significant impact on companies operating in the waste management and resource recovery industry have been briefly summarised below.

Stockpiling of Waste

It was recognised that stockpiling material can be a legitimate resource recovery operation and necessary to aggregate material for transport. However, the Committee found there is currently excessive amounts of stockpiling of industrial and chemical waste within Victoria and an inadequate market capacity to process the stockpiled materials. In response to these findings, it was recommended that the Government facilitate the development of more extensive end markets for the recycling of hazardous material.

To address the immediate threat posed to the public by the present stockpiles of chemical and industrial waste, the Committee has recommended the immediate suspension of licences and the issuance of penalties on companies whose storage volumes exceed what is allowed for under their licences.

Landfill Levy

The Committee noted that Victoria has the lowest landfill levy rate of all mainland states which is incentivising waste to be transported into Victoria. It has been recommended that the landfill levy be increased to remove the current incentive to transport waste from other jurisdictions as well the incentive to send material to landfill generally.

Contamination in Municipal Recycling

The contamination of co-mingled recycling was identified in the Report as hindering the ability of material to be sold and recycled. The Committee considers the reduction of contamination in municipal recycling to be a top priority for Victoria's waste and resource recovery system.

As glass was identified as the key contaminant in co mingled municipal recycling bins, the Committee has recommended a separate bin for municipal glass recycling.

Food Organics and Garden Organics (FOGO)

The report noted that 40% of waste in municipal landfill bins is organic and that the landfilling of this waste is contributing to the production of greenhouses gases, including methane. It was recommended by the Committee that the Government, in partnership with local councils, work towards a goal of zero FOGO going to landfill through the development of a standardised state wide system of FOGO services.

Auditing of Recovery Rates

The report noted the absence of mandatory auditing of waste and resources recovery companies with respect to their recovery rates. The Committee formed the view that an independent auditing system would act as a deterrent for the storage or stockpiling of waste at multiple sites and ensure that waste and resource recovery companies are more transparent and accountable for the waste they collect.

On this basis, the Committee has recommended mandatory third party audits of resource recovery rates for Victorian waste and resource companies.

Waste and Resource Recovery an Essential Service

The Victorian Essential Services Commission (Commission) is currently considering whether waste and resource recovery should be regulated as an essential service under the Essential Services Commission Act 2001.

Essential services in Victoria are protected against interruption or dislocation such as unregulated strike action. The report identifies that should waste be made an essential service that is regulated by the Commission, the Commission would be required to have regard for the following matters in relation to the waste and resource recovery market:

efficiency in the industry and incentives for long term investment;
the financial viability of the industry;
the degree of, and scope for, competition within the industry, including countervailing market power and information asymmetries;
the relevant health, safety, environmental and social legislation applying to the industry;
the benefits and costs of regulation (including externalities and the gains from competition and efficiency) for consumers and users of products or services (including low income and vulnerable consumers);
regulated entities; and
consistency in regulation between States and on a national basis.

The Committee found there to be a strong case for the declaration of waste and resource recovery services as an essential service.

Container Deposit Scheme

The report identifies that Victoria is the only state or territory in Australia to not introduce a Container Deposit Scheme (CDS). It was noted that CDSs in other jurisdictions, particularly NSW's "Return and Earn Scheme" have had great success.

The Committee has recommended the introduction of a container deposit scheme to supplement improved municipal kerbside recycling services, subject to a cost-benefit analysis being undertaken.

A Circular Economy

The Committee made a number of recommendations to promote the uptake of the circular economy model. The circular economy model of waste management promotes the repair, reuse and recycling of materials in order to get as much out of them as possible. It aims to shift away from the 'use and dispose' way of thinking.

The Committee's recommendations include:

That consideration be given to the introduction of extended warranty requirements for products noting that built in product obsolescence exacerbates existing strains on the waste and resource recovery sector and obstructs the principles of waste avoidance and a circular economy.
The introduction of packaging import requirements for products to ensure it is recyclable and/or contains recycled materials.
That the Government advocate for a national product stewardship scheme incorporating additional material streams, and establish defined pathways for durable goods.
The introduction of initiatives across the state that extend the life of products such as repair cafes which have had great success.
Government work with industry to ensure manufacturers meet their responsibilities in relation to Australia's 2025 National Packaging Targets, the targets being:
1. 100% of all Australia's packaging will be reusable, recyclable or compostable by 2025 or earlier.
2. 70% of Australia's plastic packaging will be recycled or composted by 2025.
3. 30% average recycled content will be included across all packaging by 2025.
4. Problematic and unnecessary single use plastic packaging will be phased out through design, innovation or introduction of alternatives.

We note that the Victorian Government's circular economy policy and action plan is due to be released prior to the end of the year. It would be expected that the policy will pick up many of the recommendations made by the Committee.

Waste and Resources Recovery Infrastructure

The Regional Waste and Resource Recovery Implementation Plans (RWRRIPs) prepared by each Regional Waste and Resource Recovery Group, set out how the waste and resource recovery infrastructure needs of the applicable region will be met for the next 10 years, incorporating a 30 year outlook. A key component of the RWRRIPs is a schedule of existing and required waste and resource recovery infrastructure which includes a timeframe for when new waste and resource recovery infrastructure is needed.

The Committee found that the Regional Waste Groups had not communicated the information contained in their required waste and resource recovery infrastructure schedules effectively. It has been recommended that the RWRRIPs include more detailed information in their required infrastructure schedules and provide a more detailed analysis of the region's infrastructure needs.

The Committee was of the view that this would assist in addressing the lack of clear strategic direction which undermines investment certainty in Victoria's waste and resources recovery infrastructure.

Other recommendations made by the Committee with respect to waste infrastructure include:

That support be provided to develop more regional waste and resource recovery businesses.
A target of zero municipal residual waste being sent to landfill in Victoria by 2030 is adopted.
Requirement for all building projects to lodge a disposal plan for all building waste with a high requirement for minimal waste to landfill.

Energy from Waste

The Committee recognised that a policy statement on energy from waste is critical to provide certainty to investors noting that those businesses and investors investigating or pursuing energy from waste options in Victoria are doing so at significant risk given the lack of policy clarity.

Energy from waste is seen by many as an alternative to landfill for the small proportion of remaining waste. The Committee agreed and has recommended that the Government implement energy from waste technologies in Victoria, in conjunction with a future circular economy policy, as an alternative to landfill for residual waste.

It was further recommended that the:

Government remain 'technology agnostic' when developing its policy statement on energy from waste; and
policy statement should emphasise the use of best practice technologies that minimise any impact on the environment and on public health.

Again, it will not be a long wait to see if the Government adopts the Committee's recommendations as its position on energy from waste is expected to be addressed in its circular economy policy due for release in late 2019.

Market Development

The Committee formed the view that there was scope for the Government to greatly expand its investment into research and development of new uses for key recycled materials. The Committee noted that the development of strong and sustainable domestic markets across Victoria would require significant and continued investment.

It is expected that funding announcements with respect to fostering market development may occur in connection with the release of the Government's circular economy policy.

With the aim of building markets for recycled material, the Committee has also recommended that:

targets be set for the expansion of the recycling market;
introduction of minimum recycled content requirements for new packaging produced in Victoria; and
introduction of recycled content requirements for state and local government procurement and an obligation for agencies to publicly report on compliance with these requirements

Infrastructure Victoria Report

Many of the findings and recommendations made by the Committee echo the intervention and actions proposed by Infrastructure Victoria in their report on Victoria's recycling and resource infrastructure released in October this year. These include:

A review of Victoria's landfill levy to ensure it is not incentivising negative outcomes for the waste sector.
Specific targets for recycling.
Ongoing recycling education campaigns supported by consistency in waste collection processes across local authorities.
Reductions in the contamination of co-mingled recycling.
Introduction of a CDS subject to more analysis on optimal design.
Investment into the development of end markets for recycled material.
Disincentives to the use of virgin materials in production.
Changes to the Victorian and local Government procurement guidelines to include sustainability and recycled content requirements.
Policy guidance and clarity for the energy from waste sector.
Support for the separation of FOGO from residual waste.

Conclusion

The findings and recommendations of the Committee, if implemented, will create broad scale reform of Victoria's waste management system and have significant impacts on the waste and resource recovery industry. The industry will likely to be subject to greater oversight and regulation, more stringent reporting requirements and held to a higher standard. In turn, however, the industry should benefit from increased investment from Government, greater policy certainty and clearer strategic direction.

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