The dramatic collapse of the popular nationwide Coles and Woolworths plastic bag recycling program has seen the suspension of the REDcycle soft plastic recycling scheme in nearly 2000 supermarket outlets across the country.

REDcycle is an Australian program that recycles soft plastics into a wide range of uses.

The failure of the recycling program has been met with calls for urgent intervention in the recycling industry by government, the collapse indicative of the fragile nature of the recycling industry.

So, it is particularly galling that, each year, the NSW Government diverts hundreds-of-millions of dollars away from programs intended to reduce household and business waste.

Instead, the money is going into the Government’s own coffers.

Section 88 of the Protection of the Environment Operations Act requires certain licensed waste facilities, including landfills, transfer stations and other facilities in NSW, to pay a contribution for each tonne of waste they receive.

This contribution is referred to as the ‘Waste Levy’.

The Waste Levy contribution was first set up in 1971 with the express aim of reducing the vast amount of waste being sent to NSW landfill sites and to promote recycling and resource recovery.

The NSW Government collects about $800 million annually through the Waste Levy — but only a fraction of the money finds its way to recycling and resource recovery programs.

The NSW Auditor-General recently revealed that the NSW government had collected $3.47 billion from the waste levy in just five years.

The cost of the levy is passed back up the waste supply chain to anyone disposing of waste, including ratepayers, business and local government.

However, according to the NSW Legislative Council’s 2018 ‘Energy From Waste Technology Inquiry’ report, only about 13 per cent of the Waste Levy revenue was reinvested in waste and regulatory programs to reduce waste, while a further 13 per cent went to other environmental programs.

Close to three-quarters of the money – about $600 million annually – is shifted into consolidated revenue, instead.

This creates a terrible market distortion, with households and businesses paying out large sums of money to dispose of waste with few opportunities created to further divert recyclable waste.

There is so much more than could be done, both to reduce waste and create jobs, if the full $800 million was targeted towards the purposes it is raised for.

In NSW, we are rapidly running out of landfill sites to put household waste and increased pressure is being placed on existing recycling markets.

Indeed, the ‘Energy From Waste Technology Inquiry’ report foretold that bans imposed by China on the importation of plastics:

‘… may lead to the collapse of the kerbside recycling system, and the committee has recommended that the NSW EPA provide additional support to local councils and resource recovery organisations to meet recycling targets and manage issues such as stream contamination, bureaucratic barriers, lack of product stewardship, and limited market opportunities.”

Notwithstanding the suspension of the REDcycle soft plastic recycling scheme, the waste crisis presents an opportunity to both create new jobs and drive the transition to a circular economy.

Waste management, like water and electricity, is a critical service for any community.

Most of the actual day-to-day work of the state’s waste management system is conducted by local councils — and paid for by local communities.

This is no easy task. Landfill space in NSW is filling up fast, we need to find alternatives to ensure council waste services remain affordable and sustainable well into the future.

The REDcycle program demonstrates the community is willing to take steps to recycle more wastes than currently possible through kerbside recycling services, and how important recycling is to Australian households.

As councils look to the future, the demands of population growth and other internal and external factors are putting ever greater financial pressure on them.

Then they must cope with a range of increased levies and the rising costs of asset maintenance, too.

Making matters worse, is the constant trend by government to shift the costs of providing many vital services onto local councils — including increasing aspects of waste management.

Cost shifting by the NSW Government and the Australian Government onto local councils in NSW in the financial year 2015/16 alone was estimated to have been $820 million — up from an estimated $380 million in 2005/06.

Under the circumstances, it behoves the NSW Government – and other governments across the nation –  to work with councils who are on the frontline of dealing with waste and recycling.

Western Sydney councils are currently working towards introducing new food waste recycling services to 1.66 million residents across the region by 2030, a recent requirement of the NSW Government.

Councils and ratepayers will incur significant costs to meet this state government requirement, with levy grants provided to successful councils covering only part of the costs incurred.

The failure of the Coles and Woolworths plastic bag recycling program signals an opportune moment for the NSW Government to develop detailed waste and recycling infrastructure plans and reinvest the yearly $800 million Waste Levy it into recycling infrastructure and waste minimisation programs.

An overhaul of the State’s waste management system is urgently needed. In the meantime, councils are working together to tackle some of these challenges through the Western Sydney Regional Waste and Resource Recovery Strategy.

Developed by eight participating Western Sydney councils, the Strategy documents the key challenges and opportunities faced by local government to enhance recycling and take strategic, collaborative action on waste management in the Western Sydney region.

The Western Sydney Regional Waste and Resource Recovery Strategy represents a planned and collaborative approach to waste management, which is cost effective, supportive of Western Sydney communities and economies, and improves resource recovery in line with State Government targets.

Ironically, the Strategy is part-funded by the NSW Government through the NSW Environment Protection Authority and reinvestment of the waste levy, and is delivered by the Western Sydney Regional Organisation of Councils (WSROC), the peak body representing the participating councils.

Recently, in recognition of the excellent work being done by the Strategy partners, WSROC secured additional funding to extend the Western Sydney Regional Waste Program to 2027, however, like councils throughout NSW, has seen significant cuts to this levy reinvestment on past years.

Just think how much could be achieved in communities across NSW if the State Government was to return the $800 million Waste Levy to the purpose it was intended?

Councillor Barry Calvert: President, Western Sydney Regional Organisation of Councils (WSROC)

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This commentary originally appeared in The Fifth Estate on 21 November 2022 on 21 November 2022