WASTE – Government and industry agree need for expanded waste levy charges

4 July 2017

The Government’s 2017 review of the waste disposal levy was released on Monday. So was a report from key industry players on the levy’s future. Both recognise the need to expand and increase the charges.

The $10-per-tonne waste disposal levy was created in 2008. The intention was for it to fund waste management innovation and cut landfill. But it currently only applies to some of the waste out there.  It does not cover every facility for construction, demolition or industrial waste and/or hazardous waste. The same is true for incinerated waste and things like stockpiled tyres or agrichemicals. Waste operations run by companies for their own purposes are also mostly overlooked. Overall the levy only applies to less than a third of the country’s waste.

The levy has raised $92.2 million for waste minimisation innovation. This has reportedly led to 192,381 tonnes of waste being diverted from landfill.

There has historically been a shocking lack of hard data on waste nationwide. But what seems clear is that landfill is still increasing.

So what do we need to do to make the Waste Disposal Levy actually mean less disposal of waste?

The government review recommends investing in better data collection over the next three years. It also recommends steps to: “Develop and implement a staged approach to applying the waste disposal levy across additional classes of landfills and assess the role of a differential rating system”. This they say should happen over the next five years.

Some might be sceptical about the pace of change. Of the 11 recommendations made in the 2014 review two have been completed. Work towards five of them is in progress. But work on the remaining four recommendations is yet to be started.

Meanwhile, key industry players have released research they commissioned from consultants Eunomia. The group includes 10 local authorities and six waste companies. The report looks at scenarios for increasing and expanding the charges.

According to them the step change in attitudes to waste recovery doesn’t really happen until the levy reaches $90 per tonne. At that rate the report forecasts the levy will trigger the recovery of an additional 1.7 million tonnes of material. That would be a 50% increase in recovery.

At $140 per tonne the report forecasts that approximately 3.5 million tonnes would be diverted from landfill. However the higher relative cost may mean about 500,000 tonnes of waste being incinerated. The study indicates that a new $40 incineration charge per tonne would prevent this.

The Eunomia study predicts making these changes would increase levy income from about $50 million a year to $200 million a year by 2025. During the same period the increased diversion of waste would boost employment in recycling and reprocessing. This could create up to 9,000 new jobs. Eunomia estimates the resulting economic benefit to New Zealand could be worth up to $500 million a year.

The report concludes: “The greatest level of benefit is likely to be…with a levy of $140 per tonne for active waste, $15 per tonne for inert waste and with an incineration rate of $40 per tonne. Under this scenario there is the highest level of diversion from landfill, the highest number of jobs created, the largest increase in gross value added, and the biggest increase in material revenues.”

Of course such a drastic change could have unintended consequences. The report recommends the process begins with a regulatory impact assessment and public consultation.

Dr Dominic Hogg is founder of Eunomia. “Whilst other countries ask how they make progress towards a circular economy, the low rate of the levy in New Zealand entrenches a ‘take-make-dispose’ model of production. New Zealand’s levy rate, set at $10 per tonne of waste, is among the lowest of any country with a landfill levy in place. Overseas experience suggests that there are significant benefits to having a higher rate of levy, and to applying the levy more widely.

“Landfill levies can have a positive effect on the economy, inducing more efficient use of resources, and supporting employment generation. The argument for expanding and increasing the levy, and for a significantly higher rate than its current default rate of $10 per tonne, is compelling.”

Darren Patterson is chair of the Waste Management Institute New Zealand (WasteMINZ). He says “It’s unprecedented and exciting to see this level of cooperation from across all sectors of the waste and recycling industry. Research undertaken by WasteMINZ shows that 93% of Kiwis believe waste and recycling is an important environmental issue, yet only 29% think we do a good job. Clearly, there is a disconnect between the public’s expectation and what we as a nation are currently delivering.”

James Griffin leads the Sustainable Business Network’s Circular Economy Accelerator. He says: “Increasing the waste levy to a level where it influences business represents the single most impactful mechanic to accelerate a more circular economy in NZ. It incentivises ‘circular’ business models and disincentives’ take-make-waste linear ones. In a world of increasing populations and decreasing natural resources it’s crucial NZ businesses adopt circular economy practices if they want to remain competitive.”