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Paper recycling crisis to hit ratepayers

Wednesday, 04 April 2018
By Steve Balmforth

State governments and local councils are scrambling to deal with a looming recycling crisis following an import ban on recycled paper and plastic by China. In the latest edition of industry bible Pulp & Paper Edge, paper and board recovery and recycling strategist Steve Balmforth provides this ‘state of play’ update on Australia’s recovery and recycling challenges.

Former Norske Skog executive Steve Balmford.

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A month on from the announcement that the Victorian Government would provide $A13 million in temporary relief funding to address the recycling crisis, the New South Wales Government announced a package up to $A47 million for the same purpose.

The aim of the funding – in both states – is to support the continuation of recyclable collection services, following the quality-related import ban by China on selected recycled paper and plastic commodities.

In Victoria, of the funds made available, $A12 million has been set aside to assist local councils. Expressions of interest closed on March 16th. It is understood almost all councils participated. And why wouldn’t they!

The remaining $A1 million is earmarked to assist industry to adjust to the new market conditions.

In New South Wales, the funding will be used for similar purposes but includes a $A9.5 million allocation for industry and local government to co-invest in improving the quality of recycling materials.

In Victoria, the major receivers of recyclables – Visy, SKM and Polytrade – have been in regular discussion with the State Government and Sustainability Victoria. Some form of agreement appears to have been reached, on the per tonne funding available from the rescue package.

‘Gate fees’ (prices charged to accept recyclables) are reportedly in a range from $A70 – $A150 per tonne.

Back of the envelope calculations assume each MRF (Materials Recycling Facility) operator receives around 3,000 tonnes per week of recyclables. So, for three months, at an average $A110 per tonne, that would amount to approximately 108,000 tonnes of material, at a cost of $A11.880 million.

To complicate matters further, recent announcements state that the government rebate rate will be capped at $A55-60 per tonne.

The $A12 million funding is only until the end of June. From that time onward, the full cost responsibilities are to be managed by local governments. Significant rates increases are expected.

In NSW, the WMAA (Waste Management Association of Australia) and WCRA (Waste Contractors and Recyclers Association) have been driving action, organising meetings and proposing guidelines. They have provided advice to their members on how to address the Chinese bans.

Until the funding was announced, the situation was set to escalate in NSW. Fourteen councils are considering ceasing recyclable collection over the next two weeks.

Stockpiling has commenced in some regions. Unless there is concerted effort to deliver long-term solutions, this will cause its own problems. The NSW EPA will consider temporary stockpile limit increases.

Regardless of the temporary and one-off funding, it appears local governments, and ultimately ratepayers, will be faced with increased recycling costs to cover the shortfall, from the end of June 2018.

This is a nationally important issue. Although other states have been proactive in dialogue with the waste industry and with councils, there is still no national approach to this solvable problem, although as every day passes, more national uniformity is slowly forming.

A job for the Federal Environment Minister seems inevitable.

The bottom line? Funding support in Victoria and NSW is intended to ensure recyclable collections continue. But the funding will quickly run out, meaning ratepayers will foot the bill, until and unless some innovations and improvements are introduced to the recycling supply chain.

Steve Balmforth is principal of Steve Balmforth & Associates. Steve can be contacted at steve.balmforth@outlook.com.

 

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