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Container Deposit Schemes – Not as Simple as They Sound

By:  Alec Wagstaff Mar 2, 2013
Tags & Topics:
container recycling


Coca-Cola has been at the forefront of private sector leadership in recycling for many years. We understand its environmental and economic value and the community's desire to see it continue to expand. Things are moving in the right direction. Under the current industry driven schemes, Australia's packaging recycling rate has increased from 39% in 2003 to 63% in just eight years.

Our engagement on the issue means that we do have views about the best way to achieve improvement and that at times we disagree with some proposed solutions.  But let's be clear we share the same objective of doing more.

We agree that more needs to be done to address litter and recycling in Australia – and have been working on and funding solutions for decades, along with our industry partners. Coke has a demonstrated track record at leading industry efforts around the world to increase recycling, reduce litter, reduce the amount of packaging used and to help create viable markets for the material recovered.  A container deposit scheme (CDS) is often claimed to be a “simple”, “low cost” solution to increase recycling.

Long gone are the days, fondly recalled by some Australians, where the only recycling system was a glass bottle returned to the local corner store that yielded five cents for a mixed bag of lollies. Times have changed.

Today, many Australians use our world-class kerbside recycling scheme: more than 90% of homes have access to recycling and approximately two thirds** of cans and bottles are recycled at home. Home recycling isn’t the issue, but bringing in a CDS will place that successful kerbside system in jeopardy by eroding its economic foundation. Removing thousands of tonnes of bottles and cans from kerbside bins would increase the costs to local councils of providing a recycling service to their ratepayers.  This was borne out in a recent study undertaken by the National Packaging Covenant Industry Association.

According to Visy, Australia’s largest recycling company, the introduction of a CDS is estimated to impose a cost on its customers in Victoria (ie. local councils) of $4-$6 million a year. That’s a significant cost to local government budgets.

WHAT IS A CDS AND WHY DO PEOPLE ADVOCATE FOR IT?

A common CDS proposed is a 10 cent refund deposit on eligible recycling containers (usually excludes wine/fresh milk containers >1 litre). Some people argue that it is a supplement to the welfare system by providing income to people who scavenge bottles and cans from bins.  Some say it could help charitable groups with fundraising and provides pocket money for the kids. It promotes more recycling and less litter of bottles and cans and enables a network of drop-off facilities to be established for returning product.

Sounds like a no brainer, doesn’t it?

BUT LOOKING INTO IT A LITTLE DEEPER …

What happens to all the packaging not covered by deposits?

How will consumers redeem the deposit?

Where will they redeem it and how far will they need to travel to do so?

What impact will it have on the economics of Australia’s world-class kerbside recycling system?

Who pays for the deposit recycling centres (land, infrastructure, transport and staffing)?

How much greater rates of recycling will we see?

How much less litter will result?

A September 2009 Australian Senate Inquiry noted of this subject: “… how complex this area of policy making can be”.

BUT IT SOUNDS SO SIMPLE, YOU PAY 10 CENTS AND YOU GET 10 CENTS BACK, WHAT’S THE PROBLEM?

The problem is that consumers don’t pay 10 cents, as the Northern Territory experience has shown. Under a CDS they pay up to 20 cents more per drink, because the cost of running the extensive infrastructure needs to be paid for and inevitably is passed on to consumers.

We don’t believe Australian families deserve to be slugged with yet another cost of living increase that will push grocery prices up when there are cheaper and equally effective alternatives on the table. It’s worth noting that after 12 months of CDS, Northern Territory recycling rates are well below the Australian average, with only one in every three containers currently being recycled.

But it’s not just industry that says a CDS costs money - the Council of Australian Governments found the cost of a national CDS to the economy would be between $1.4 and $1.76 billion.

Many CDS proponents say consumers don’t pay more in South Australia – why should we believe that they will elsewhere under a CDS?

For many years drink manufacturers spread the cost of the system in South Australia across national pricing – that is, all Australian families paid for the SA system. In recent years, that’s changing. Manufacturers now typically pass on the deposit and running costs to retailers.  Whether that’s always reflected in retail prices is something that retailers decide but the fact is South Australians now pay more for their deposit system.

Modeling has shown that a CDS is likely to raise the cost of an average household grocery basket by 1.35% - double government estimates of the inflationary impact of Australia’s carbon price on grocery bills. It is therefore a significant – and permanent – increase in the cost of necessities, coming at a time when many families cannot afford it.

BUT WHAT DOES THE AUSTRALIAN COMMUNITY WANT?

In August 2009*, research conducted with 1,400 Australians looked at community attitudes toward and support for container recycling, including a CDS and an alternative “out and about” recycling scheme, similar to the one industry proposes.

What did the research find?

Eighty-seven percent of those surveyed initially supported container deposits, which fell to 75% (still strong) when made aware of cost impacts. However, when offered the alternative of being able to recycle “out and about”, those surveyed eagerly embraced it. Sixty-eight percent supported "out and about" recycling systems, while 26% still preferred a CDS (6% remained unsure).

THE SOLUTION

Australia’s Environment Ministers are currently considering ten options for lifting Australia’s recycling rates – seven of which are not container deposit schemes. There are a range of views on the best option – the one we and others in the industry have put forward is a $100 million plan that independent consultants PricewaterhouseCoopers say costs 28 times less than container deposits while delivering similar reductions in litter and increases in recycling rates.

The National Bin Network (NBN) we propose is a comprehensive industry plan to reduce litter and increase recycling.  It includes the installation of recycling bins in major venues throughout Australia, in airports, rail and bus stations, entertainment venues, convention centres, sporting stadia and clubs, shopping centres, pubs and clubs - venues where people congregate and are likely to consume beverage containers and other packaging.  It also includes the development of new markets for recyclables, major new processing infrastructure such as optical glass sorting facilities, and building on our current efficient and convenient kerbside recycling systems. The NBN also includes significant funding to community groups and local governments to clean up litter hot spots, and, more importantly, to keep them clean into the future.

WHAT INDUSTRY PARTNERSHIPS HAVE ALREADY ACHIEVED IN INCREASING RECYCLING IN AUSTRALIA…

New away-from-home recycling bin systems supported by our industry already deliver more than 1.3 billion visits annually.  Industry has installed 7,900 new recycling bins, providing recycling availability for 92% of airport passengers, 55% of higher education staff and students, 52% of shopping centre visitors, 42% of train passengers, and 70 major sporting stadia and entertainment venues with over 68 million patron visits annually (including iconic venues such as the Sydney Opera House, cricket grounds - the WACA and GABBA, Melbourne Entertainment Centre, Aurora Stadium and Exhibition Park in Canberra).

WHAT DOES AUSTRALIA NEED TO DO NOW TO RAISE RECYCLING RATES ….THREE KEY STEPS

1. Significant expansion in away-from-home recycling infrastructure

2. Continued expansion and improvement of the kerbside system

3. Greater investment in litter enforcement by state and territory governments

WE ALL AGREE THE OBJECTIVE IS LIFTING RECYCLING RATES…

The question isn’t “should we be doing more on recycling and litter reduction?” The question is “what is the most efficient way of lifting recycling rates, that doesn’t in effect apply a cost of living tax on consumers?” Container deposits have consistently been found to be the most expensive and inefficient method of increasing recycling rates.  That’s why they have been repeatedly considered and repeatedly ruled out for decades by Australian governments and why we shouldn’t proceed with a CDS now.

Along with other leading beverage industry companies, Coca-Cola stands ready to commit significant funding into proven programs to lift Australia’s recycling rates and to work with all Australians to continue to reduce Australia’s litter.

*UMR Research Pty Ltd nationwide survey key public places - August 2009

** Australian Beverage Packaging Consumption, Recovery and Recycling Quantification Study, 2008

Want more? Read our approach to sustainable packaging here.

Alec Wagstaff is the Manager of Corporate Affairs at Coca-Cola Amatil, one of the largest Coca-Cola bottlers in the Asia-Pacific region. Coca-Cola Amatil is headquartered in Sydney, Australia.