Economic analysis commissioned by Soft Plastics Stewardship Australia estimates national recycling reforms could deliver up to $278 million in net productivity gains and stimulate up to $2.6 billion in capital investment each year.
Nationally aligned packaging and recycling rules could deliver net productivity gains of between $115.1 million and $277.7 million a year, according to a major economic report launched in Canberra today.
Commissioned by Soft Plastics Stewardship Australia (SPSA) and prepared by economist Stephen Koukoulas, Efficiency, productivity and resilience: Further integrating recycling into the broader manufacturing supply chains examines the economic effects of Australia’s fragmented packaging and recycling system.
The report identifies two priority reforms: nationally consistent standards for packaging design, labelling, kerbside collection and recycling; and the progressive introduction of regulated, producer-funded stewardship for priority materials including soft plastics, batteries, mattresses and textiles.
It values Australia’s combined packaging, food and grocery, retail, council and recycling supply chain at $644 billion, but argues that recycling remains constrained by inconsistent requirements across eight states and territories and 537 councils.
These differences create duplicated administration, conflicting recycling messages, higher contamination and reduced investment certainty, the report says.
“The cost of doing nothing is not zero,” Koukoulas said, describing the additional costs created by regulatory inconsistency as a “fragmentation tax”.
The analysis estimates gross productivity gains of between $170.5 million and $333.1 million a year. After deducting an estimated $55.4 million required annually to fund stewardship schemes for four priority material streams, the net benefit is placed at between $115.1 million and $277.7 million.
Contributing savings include $25.5 million to $47.2 million from replacing separate council education programs with a nationally coordinated campaign; $78.8 million to $146.4 million in avoided landfill costs; and $25.5 million to $38.3 million in avoided packaging and labelling changes.
The report also estimates that improved feedstock volumes and quality could generate between $30.5 million and $89.5 million in annual productivity gains through better use of existing plastic recycling infrastructure.
Potential capital investment is estimated at between $1.62 billion and $2.61 billion annually. This comprises $135.5 million to $251.7 million in plastic recycling infrastructure, excluding chemical recycling; an indicative $387 million to $517 million for chemical recycling; and $1.09 billion to $1.84 billion in food and beverage manufacturing investment.
The food and beverage estimate is based on the assumption that half of the additional capital expenditure identified as necessary by the Australian Food and Grocery Council is contingent on packaging policy certainty.
The report acknowledges that its calculations are estimates drawn from public and industry sources. It recommends that the Federal Government undertake a Policy Impact Assessment, with Finance or Treasury testing the projections through more detailed modelling.
Soft plastics the acute failure
Soft plastics are identified as the most pronounced market failure. The report estimates that 94 per cent of soft plastic packaging is landfilled, representing approximately $900 million in lost material value and $154 million in landfill costs each year.
Australia imports an estimated $957 million worth of soft plastic annually, while the lack of recovery leaves domestic recycling capacity underused and increases reliance on imported virgin and recycled materials.
The report says 85 per cent of industry participants are not contributing to SPSA’s voluntary scheme, limiting its collection capacity and the feedstock available to recyclers. It argues that voluntary stewardship cannot deliver the participation, investment certainty or economies of scale required for a national collection system.
Consumer confusion is adding to the problem. Research cited in the report found 49 per cent of Australians had placed soft plastics in kerbside recycling in the hope that they would be recycled. At the same time, 94 per cent said they would be likely to use a new soft plastics recycling scheme if one became available.
Under the reforms modelled, the report estimates that an additional 492,800 to 915,200 tonnes of packaging could be diverted from landfill each year. Plastic recycling could rise from 239,300 tonnes annually to between 315,600 and 463,000 tonnes.
SPSA says nationally aligned rules would improve feedstock quality, reduce contamination and give manufacturers and recyclers greater confidence to invest, supporting sovereign manufacturing capability and the Federal Government’s Future Made in Australia agenda.
The Canberra launch brought together MPs Kate Chaney, Sophie Scamps and Simon Kennedy, SPSA CEO Barry Cosier and report author Stephen Koukoulas.
The report has been released one day before Australia’s environment ministers meet and follows confirmation that the Federal Government does not intend to introduce a new Commonwealth packaging scheme during this term.
