Recyclables export tax a blow to industry: NWRIC – Australia

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The Federal Government is proposing to introduce a tax for all recyclables exported after July 1. In addition to charging exporters a new annual registration fee of $30,000, all glass, used tyres, plastics, paper and cardboard products exported will incur a new government tax of $3.98 per tonne.

The tax is said to cover department administration fees for overseeing export bans on the sector.

Rick Ralph, NWRIC Chief Executive Officer, said there needs to be a greater focus and accountability across the entire supply chain, including importers of materials, product manufacturers and their distributors.

He said repeated requests for council directors to meet with Minister for the Environment and Water, Tanya Plibersek, to discuss the challenges the new charges will place on the industry have been met with silence.

The new tax on recycling comes at a time when the Australian Government has committed to investing $250 million into new and upgraded recycling infrastructure through the Recycling Modernisation Fund (RMF). While $213 million in government co-funding has been allocated across 85 projects as part of the RMF, Ralph said some jurisdictions have yet to deliver a single on-the-ground project, and jurisdictions that have projects underway are lagging in terms of permits and development approvals. 

“Significant shortfalls in Australian infrastructure, coupled with the inhibited growth in markets for locally produced recycled content, have resulted in a critical misalignment between local industry capacity and the government’s regulatory program,” Ralph said.

“In Australia, there has not been enough growth in the market for recycled materials and there are currently no compelling incentives for manufacturers to prioritise locally produced recycled materials over imported virgin materials.

“Australia is both a net importer and exporter of these materials and we simply do not have the internal capacity to reuse the total quantities of recyclable commodities it recovers. Council members have and continue to invest in new capacity to add value to the commodities recovered, but the reality is for years to come we must export the excess commodities we can’t use locally, or the alternatives are simply to landfill.”

He said, as an example, Australia has an estimated 1.2 million tonnes of recyclable paper and cardboard that is excess to local markets and must be exported. In the lead-up to a ban on paper and cardboard exports to be implemented in 2024. the Council commissioned an independent economic analysis report to quantify why paper and cardboard streams should not be captured within the export regulations. 

“Our report confirmed the findings of the government’s own regulatory impact statement which identified in all three business cases, there to be no community benefit for banning paper and cardboard exports,” Ralph said. “In fact, the costs to community and industry would be more than $257 million annually if regulated. With the introduction of these government charges all recyclers are going to be taxed on commodities we have exported successfully for more than 100 years.”

NWRIC members and its affiliates service more than 80 per cent of all Australian households with waste and recycling services, as well as more than 80 per cent of all Australian commercial, industrial, government, medical, and other businesses. Ralph said the introduction of new charges, including the tax and the additional costs that businesses will incur to manage them, must be passed on to all customers. 

He said the new charges will also increase the risk of businesses taking the cheaper alternative by landfilling products rather than have a recycling service. 

“All work in respect to introducing these pernicious new business costs must be stopped and an urgent review to address the fundamental challenges these export bans are placing on business must be immediately commissioned by the Minister,” Ralph said.

“Further, the Council is advocating the auditor general undertake a formal review of all RMF project funding and establish a baseline of actual local capacity to meet the government regulatory frameworks and recycling targets and to identify critical shortfall areas of our local capability. 

“These difficulties demonstrate the roadblocks already in place for recyclers in meeting the capacity challenges of the Australian recycling industry and therefore the risks in investing in that industry; a problem only set to be exacerbated by a new tax. The local recycling industry must be given space to advance, rather than be further burdened with ’end of pipe’ regulation.”

The council is right, the responsibility needs to be spread across the supply chain, not just the final user.   But a tax is needed to administer these programs otherwise  poor quality waste will be exported under the guise of high quality sorted material.