In a webinar run yesterday and today for Australian packaging industry stakeholders, the Department of Climate Change, Energy, the Environment and Water (DCCEEW) outlined a three-option framework for proposed reforms to the packaging system, ahead of publishing a consultation paper this Friday (27 September) for industry feedback by 28 October. PKN reviews the key ideas presented, and some of industry’s concerns raised during the session.
As the Australian packaging industry is by now well aware, the Australian Government is considering reforms to the packaging system with the aim to transition to a circular economy. This was first flagged in 2023 when Environment Ministers announced a plan for packaging reform. Since that time, considerable work has been done to lay the groundwork, consulting with industry and peak bodies to arrive where we are today: on the cusp of reform but with a way to go yet.
While there have been calls from some sectors of industry for the process to speed up, especially those in favour of mandating recycled content, what was clear from the webinar, attended by over 700 stakeholders both yesterday and today, is that government will not make any decisions around regulatory change without wider consultation with industry. DCCEEW was at pains to acknowledge it needs more information and evidence about the impact any one or more regulations could have on businesses or the packaging system. But what was also made patently clear is that we cannot continue as things are.
Why do we need reform?
Cameron Hutchison, head of the Waste and Resource Recovery Branch at DCCEEW, presented the scope of the government’s considerations in the first part of the webinar. He began by noting that the current co-regulatory system – under the ambit of Australian Packaging Covenant Organisation (APCO) and the National Environment Protection Measure (NEPM) – which has been in place for 25 years, has not met environmental targets despite best efforts to date.
Citing the latest APCO figures for 2022, Hutchison said that of the 7 million tonnes of packaging placed on the market in 2022, only 56 per cent of packaging was recovered (4 million tonnes), with 3 million tonnes landfilled at an estimated value loss of $900 million.
Hutchison pointed out that while much of this material was designed to be recovered, ultimately it was not.
“There's a significant gap between the amount of packaging designed to be recovered and the amount that’s recovered. We are well short of achieving the National Packaging Targets in 2025, particularly the targets for plastic packaging,” Hutchison said.
Here are the plastic stats he cited: In 2022, only 42 per cent of plastic packaging was classified as having good recyclability, which is well below that of other materials. Only 20 per cent of plastic packaging was recycled, recycled or composted. The average recycled content target for plastics is 20 per cent but only 6 per cent of plastic packaging is made from recycled plastics.
[Ed's note: Of course, this is not news to packaging stakeholders, but it bears repeating. Although it would be good if shock figures like this could reverse complacency among the 2000-plus ‘free-rider’ businesses in Australia who have yet to sign up to APCO or take any action on packaging sustainability, it's unlikely to have an impact, and this in itself is a key driver for reform].
The bottom line, as found through an independent review back in 2021, is the current co-regulatory arrangement is ineffective, with issues such as unclear goals, inconsistent implementation, and a lack of compliance and enforcement preventing progress.
What’s the big-picture plan?
In line with the global shift from a linear to a circular economy, the Australian Government is working on the development of a national framework for Australia's circular economy. Hutchison said the framework is expected to be “material neutral and focus on the economic conditions, policy settings and enablers conducive to circularity”.
He said Government is working with the states and territories to harmonise key policy settings, including on kerbside collections, to boost householder confidence and participation in recycling, and to provide the confidence to industry in designing packaging for recovery.
Government’s $250 million investment in the recycling modernisation fund aims to expand Australia's recycling capacity; it believes the “Remade in Australia” brand will help consumers identify products with recycled content, boosting demand for Australian recycled content. In addition, the National Framework for recycled content traceability aims to increase confidence in recycled materials.
Hutchison went on to mention Australia's participation in international efforts to end plastic pollution and its participation in a treaty covering the full life cycle of plastics. Packaging regulatory reform is highlighted as crucial for addressing plastic consumption and pollution in Australia.
What will the consultation paper cover?
The consultation paper will outline three options: strengthening the current co-regulatory framework, implementing national mandatory requirements, or establishing an extended producer responsibility scheme.
Key proposals include banning problematic materials, mandating recycled content, and introducing eco-modulated fees. The consultation process seeks industry feedback and this, Hutchison said, will inform the government's decision on a preferred regulatory model.
Option 1: Strengthening the current co-regulatory arrangement
Option 1 would maintain the current co-regulatory framework but strengthen it through improved compliance and enforcement.
This option would require ongoing industry and state and territory government involvement to address free riders. (As Hutchison he pointed out earlier, this is not a system that has worked to date.)
Hutchison stressed that while this option could improve packaging sustainability, the ongoing systemic issues of the current arrangement would remain, so it is DCCEEW’s early view that Option 1 it will not fully achieve the objectives of packaging reform. The reason is largely because it relies on states and territories for enforcement.
Option 2: Setting national mandatory requirements
Option 2 would see a shift to a Commonwealth regulator scheme with nationally consistent mandatory requirements for packaging.
This option could include bans on problematic materials and chemicals (eg carbon black, oxo-degradables and PFAS), progressive bans on packaging with low recyclability, and mandatory recycling labelling.
These obligations would apply to individual businesses that place packaging on the Australian market and would capture domestically manufactured and imported packaging. Businesses would need to register and demonstrate compliance with the mandatory requirements through annual reporting.
Hutchison said the consultation paper will outline the benefits and risks of this option, including the potential for targeted bans on problematic packaging formats and chemicals.
Option 3: Establishing an extended producer responsibility scheme
Option 3 would introduce a national extended producer responsibility (EPR) scheme using financial mechanisms and regulatory obligations.
This option could use eco-modulated fees (as outlined in APCO’s 2030 strategy) to drive design behaviour change and provide ongoing system funding.
Again, Hutchison reiterated the consultation paper will outline the benefits and risks of this option, including the potential for strong incentives for behaviour change and national consistency.
What are the next steps?
Hutchison emphasised the importance of stakeholder feedback during the consultation process. The consultation paper will be released on September 27 on DCCEEW’s 'have your say' webpage, and the consultation process will be open until October 28.
“The government encourages stakeholders to provide data and empirical evidence to inform the consultation,” he said.
The consultation process will help inform Government's decision on a preferred regulatory option, with further modelling and stakeholder engagement to follow.
What is the expected timeline?
To manage expectations, Hutchison gave a probable timeline:
Public consultation will take place from now until 28 October. This, he said, will inform the reform obligations and assist a formal policy impact analysis process.
In December, the Environment Ministers will meet to report on the findings of the consultation process.
In 2025 (no date specified), Government will consider the preferred option, the policy impact assessment, and next steps.
By 2026, if agreed, any new obligations would take some time to commence given the lead times necessary for businesses to prepare.
He also made it clear that the current co-regulatory arrangement will continue as the industry and government transition to reform. APCO will continue to drive action on packaging with its members, and that includes implementing its 2030 strategy. You can hear more about this strategy on the PKN Podcast, Ep 97, with Chris Foley, APCO CEO.
What was industry’s response?
While the detail of the three options was not presented in the webinar, the Q&A session and the comment trail gave a fair indication of where concerns lie.
One of the issues raised centred on consumer education on recycling in a bid to improve recovery rates of material that is already recyclable.
Jane Cronin of DCCEEW, who fielded questions together with Chris Hutchison, said the ARL Australian Recycling Label (ARL) had a big role to play in consumer education.
“The ARL has been particularly effective in this [consumer education] process, and under Option 1, a strengthened version of the co-regulatory arrangement, the ARL is a voluntary label that can be accessed by becoming a member of APCO. Under option two and three, we put forward that the ARL would be mandated, and I think that's an important distinction to be made. We really want to ensure that when people are at the bin with that piece of packaging, they understand how to dispose of it correctly, so we can get reduced contamination in our kerbside streams and see more recyclable materials being fed through the system.”
Respondees were also curious as to whether Government would be open to a mix of the three options, and in short, the answer was yes. Hutchison said, “Depending on the feedback we get through this process, there could be some cases to suggest that there could be a mix of the components across options. So, I would suggest that that is very much a live consideration.”
Another concern related to how DCCEEW will ensure that the new regulations avoid a transition from one undesirable material or type of packaging, to one that is the same or worse in terms of environmental outcomes.
Cronin responded that Option 2 is looking at banning the most problematic materials and chemicals of concern that impede recyclability, to “get the worst of the worst out of the market”; it is also based on introducing progressive bans of packaging with poor recyclability.
She said, “We recognise that this is a blunt instrument, and it lacks the nuance… that can be achieved under an under eco modulated fee model. Having said that, she added, “For progressive bans, we are looking at quite significant periods of time that those bans will be introduced... that could be anywhere from five to 10 years... that work needs to be explored further, and there would need to be modelling done to support that.”
She noted under Option 2, you have an approach where you are wanting to take packaging off the market. Option 3 is the more nuanced approach, where you're using a financial mechanism to shift behaviour and allowing businesses to make changes whilst they understand the implications for their businesses.
“We want to work with industry to ensure that the timeframes are appropriate to allow for appropriate investment in innovation as well as research and development and testing to ensure industry is best placed if we were to go down the pathway of banning materials being placed on the market,” Cronin emphasised.
A chief concern lies with securing sufficient supplies of recycled content for some types of packaging, applications and some materials. The question asked was: How will the proposed recycled content thresholds and obligations be developed to take these market realities into consideration?
Cronin responded: “What we've heard through targeted consultation that we've done... is the need for regulatory certainty around recycled content and requirements to use recycled content. This will create that [pull-through] demand and end-markets to ensure that industry has the confidence to invest, not only in changing their packaging and production lines, to increase the use of recycled content, but also the investment in domestic manufacturing, to ensure where there is enough feed stock in the Australian system.”
She added: “We recognise that for different materials and for different polymers, there are going to be different levels of recycled content that is appropriate, including for food contact packaging. There's been work done in the lead up to this consultation around looking at appropriate levels of thresholds and recycled content across those material streams, as well as polymers. And you'll see that information detailed in the consultation paper.”
“We're really keen to get industry views to understand and feedback on those thresholds, to understand where there are challenges. We know it's not only across material streams of polymers, but it's also to do with the size of the business. And we know there are particular challenges for SMEs being able to access recycle content, and we also know there are challenges in relation to verification and traceability, so businesses have that assurance that the material that they can source is going to be consistent and of the quality that can ensure they can produce and use increased recycle content with confidence.”
Other issues raised related to taking into consideration appropriate time frames for R&D and innovation, especially in heavily regulated industries like medical and pharmaceutical packaging. Also of concern was harmonisation of kerbside collection and recovery systems across the country, and traceability framework for recycled materials. Keeping Australia in line with international best practice was also raised, as was levelling the playing field to ensure regulations will apply to both domestically manufactured and imported packaging.
All the concerns raised (and there were more) served to underline the importance of the consultation process and the onus is on industry to take this opportunity to provide accurate feedback to DCCEEW
Companies in the fibre packaging industry, namely Huhtamaki, Tetra Pak and Zipform Packaging, told PKN they are pleased to see the Australian government taking bolder steps towards reforming packaging which would lead to significant improvements in sustainability and waste reduction. They stressed that a “fact-based and scientific approach to packaging policies is essential for an effective reform" as this can “help ensure that decisions are based on robust data regarding functionality, environmental impact, material efficiency, and lifecycle analysis”.
They said, “To achieve a future-oriented recovery system that supports optimal packaging design, packaging regulations must balance both upstream and downstream perspectives.
“We have significant expertise and experience in developing circular solutions for packaging and are committed to supporting DCCEEW in achieving the objectives set out in this reform initiative.”
PKN also spoke to Chris Foley, APCO CEO, who reiterated that APCO will continue supporting Government in the consultation process, but would be pursuing steps outlined in its 2030 Action Plan, including the phased introduction of eco-modulation fees.
PKN will continue to keep industry updated.
