Levy reform urgently needed
4 October 2019
A national approach to levy pricing, adoption of the levy portability principle by all jurisdictions, and more transparent management of levy funds are urgently, required writes Rose Read, CEO of the National Waste Recycling Industry Council (NWRIC).
Waste or landfill levies are a key regulatory tool used to improve recycling and fund environmental liabilities from waste generation. They have a significant effect on both the commercial environment of nearly every waste and recycling business and community behaviour. They also generate significant amounts of funds for each jurisdiction. Therefore, carefully considered levy regulations nationwide are essential to advancing Australia towards a circular economy.
The National Waste and Recycling Industry Council (NWRIC) has recently undertaken a review of the current status of waste and landfill levies across Australia NWRIC White Paper – Review of Waste Levies in Australia.
This white paper examines by jurisdiction, how much the levies are, what waste types are levied, where and when do they apply, how they are administered, the amount of funds raised each year and how these funds are spent.
It also analyses the impacts and benefits of these levies on waste and recycling outcomes across Australia and identified a number of issues that need to be addressed urgently to ensure the levies achieve what they were set out to do and not drive waste down the hierarchy.
The white paper does not include an in-depth analysis of the economic, environmental social effectiveness of the levies, price points or return on investment.
Waste/landfill levies were first introduced in 1971 by NSW at a $0.56 per tonne. Since then South Australia, Victoria, Western Australia and Queensland have introduced levies. In 2018-19 rates ranged in price from $0 to $250 with an estimated $1.13 billion raised. In 2019-20 this is expected to increase to $1.54 billion with the introduction of the waste levy in Queensland. This will equate to approximately $58 per capita per year, up from $39 per capita per year in 2018-19.
Of the $1.13 billion funds raised in 2018-19, an estimated $282 million or 25 per cent nationally was reinvested into activities relating to waste and recycling, state EPA’s or climate change (in the case of Victoria). At a state level the reinvestment rate of the levy ranged from 10.9 per cent in NSW, 25 per cent in WA, 66 per cent in Victoria to 73 per cent in South Australia.
Funds not reinvested were either retained in consolidated revenue (as in the case of NSW and WA) or retained in nominated funds such as Victoria’s Sustainability Fund, SA’s Green Industries Fund or SA’s Environment Protection Fund where some of the funds may be invested in various non-waste or recycling related environmental activities.
In 2019-20 it is estimated that of the $1.54 billion in funds raised, around $569 million or 37 per cent will be reinvested into waste and recycling activities. This increase can largely be attributed to the Queensland government’s commitment to reinvest over 70 per cent of the levy, with local councils receiving 105 per cent of their levy contribution.
On the positive side the levies have increased resource recovery over time and enabled the commercial development of local resource recovery businesses including material recovery facilities; processing facilities for plastics, paper, cardboard, glass, timber, organics; alternate waste treatment plants; and waste-to-energy facilities for fuel manufacture, thermal and electricity generation.
The levies have also funded various waste and recycling initiatives. These range from state EPA and local government environmental compliance activities, community and business waste and recycling education campaigns, research and development, data collection, construction of new infrastructure by local government and private enterprise, to cleaning up waste and pollution generated from illegal actions.
On the negative side however, differentials in levies across regions and between states has created a levy avoidance industry, both legal and illegal resulting in potentially recyclable material ending up in landfill, and hazardous material being disposed of inappropriately. This has become big business particularly in NSW and WA due to the significant variability of levy rates for solid, hazardous and liquid wastes. It is estimated that between 1.5 million to three million tonnes of waste has been transported per annum either significant distances to landfills where levies do not apply, dumped into the environment, stockpiled or in the case of hazardous wastes hidden or mislabeled to reduce or avoid state levies.
Key learnings from this analysis are the vastly different approaches states and territories take to levies. From how much is charged between regions and states; what wastes are levied (i.e. solid, liquid, hazardous or prescribed) and how they are defined; where liability for the levy is charged; how the levy is administered and how levy funds are managed, reinvested into activities to improve the waste and recycling practices and reported on.
Of major concern is the lack of transparency in most jurisdictions of how much funds are collected per year, how and where they are invested in waste and recycling activities and assessment of the effectiveness of the investment in achieving waste and recycling strategies and targets.
The NWRIC believes there is an urgent need to reform the current state levy structures, pricing, administration and investment management. It is critical this reform is done in a coordinated manner between all state and territories to remove interstate inconsistencies that are clearly driving poor waste disposal behaviours contrary to the objects of the levy to increase resource recovery and environmental protection.
This will be the only way to ensure the best return on investment of levy funds in delivering better waste management and resource outcomes expected by the community.
Specifically, the NWRIC recommends that state and territory governments together with the federal government:
- Develop a National Levy Pricing Strategy through COAG that prevents the inappropriate disposal and movement of waste between regions and states and ensures the resource recovery industry remains viable and competitive by removing significant geographic levy differentials and providing recycling residual discounts or recycling rebates where justified.
- Develop National Waste Levy Protocols for which wastes should be levied (i.e. solid, liquid, hazardous and prescribed), where the liability for the levy sits (i.e. at point of generation and is portable across regions and states), how far waste can be moved (i.e. proximity within or across states) and how the levy is administered (e.g. payments, bad debts).
- Are more transparent and accountable for the total amount of levies collected by each jurisdiction by:
- setting up a separate Levy Trust Account (similar to Victoria’s MLL Trust Account) where all levies are retained;
- guaranteeing a minimum percentage of levies (suggested 50%) to be spent annually on activities to implement the jurisdiction’s waste avoidance and resource recovery strategies, resource recovery and remanufacturing industry development plans, market development initiatives and infrastructure plans; and
- reporting annually on the total amount of levy funds collected and spent (including non-waste and recycling related expenditure) and outcomes achieved.
9th October 2019