Click here to download Covec’s revised 2008 report of the potential impacts of Container Deposit Legislation and compulsory take-back of all packaging by retailers, as allowed for by the Waste Minimisation (Solids) Bill as reported back by the Local Government & Environment Select Committee.

Overview

Deposit refund schemes involve the payment of a deposit when a product is purchased, which is repaid when the product or packaging is returned after use.  This system provides a financial incentive for returning products or packaging to a centralised facility or to the point of sale.

The ‘classic’ deposit refund scheme is used for beverage containers (i.e. drink bottles).  A number of beverage container deposit schemes operate in the USA and Europe, most notably Germany.  South Australia has had a deposit refund scheme on selected beverage containers since 1977. 

In New Zealand during the 1970s beer, soft drinks and milk were packaged in glass refillable, returnable containers and a voluntary deposit system was common throughout the country.  These schemes were largely phased out during the 1980s due to the changing market place with New Zealand competing on the international stage, both as a major importer and exporter.

Today over 95% of New Zealanders have access to facilities to recycle packaging, i.e. paper, glass, cans and plastics 1 & 2.  Seventy-seven percent of New Zealand councils offer households a kerbside recycling service.  Beverage containers can therefore be easily recycled, which makes a container deposit system unnecessary.  However, ever since the voluntary scheme was phased out, there have been calls from various quarters for a mandatory deposit on beverage containers in New Zealand.

Findings of the Australian Productivity Commission

Deposit-refund schemes are typically costly and would only be justified for products that have a very high cost of illegal disposal. Container deposit legislation is unlikely to be the most cost-effective mechanism for achieving its objectives of recovering resources and reducing litter.

Kerbside recycling is a less costly option for recovering resources, while general anti-litter programs are likely to be a more cost-effective way of pursuing overall litter reduction [Finding 9.3].

Productivity Commission 2006, Waste Management, Report no. 38, Canberra

Click here to download the Productivity Commission's report

Packaging Council Position

New report shows that introducing deposits on containers may make us feel better but will hit us in our pockets

The Packaging Council has released a detailed review of the economic and environmental impacts of introducing a container deposit system in New Zealand conducted by independent economic consultancy Covec Ltd.

This report updates a previous report undertaken by the same economists in 2006 on the possible impacts of the Waste Minimisation (Solids) Bill. Speaking at the Packaging Council's Annual General Meeting Executive Director Paul Curtis said:

"We asked Covec to update the report for two reasons. Firstly we wanted to make sure that the analysis was pertinent to the current Waste Bill which has been substantially amended during its two year passage through the legislative process. Secondly we wanted to address criticisms of the initial report made in Envision NZ's report into container deposits which was published last year."

"In the process we have amended the number of containers that would be included in a deposit refund scheme to just beverage containers excluding food jars and cans, milk containers and aerosols. We have also used 2006-2007 recycling data which reflects a 20% improvement in recycling over the previous year."

The revised analysis concludes that though a deposit refund scheme would reduce waste from landfill by approximately 45000 tonnes, the net impact on New Zealand consumers would be an additional annual cost of between $48 to $90 million. Using the mid range estimate, the additional annual cost would be around $1600 for every additional tonne recycled.

Mr Curtis said that the study shows there is no economic or environmental benefit to New Zealanders of introducing a tax on containers:-

"One of the fundamental provisions in the Waste Bill is that mandatory take back schemes must be based on the economic and environmental benefits outweighing the economic and environmental costs. Well quite clearly they don't! We took on board Envision's criticism of the methodology and reviewed their own analysis of Container Deposit Legislation set out in their report "The Incentive to Recycle". Covec have outlined the analytical errors made in this report which fail to factor in the infrastructure costs of establishing a deposit refund system alongside a mature nationwide kerbside recycling system."

"What we have found is that recycling rates have increased and are continuing to increase with more material types being collected and new markets for recycling opening up. Covec's model for a refund system is based on looking at the best options available from overseas experience whereby consumers would either take their drinks containers back to supermarkets or to recycling transfer stations."

Mr Curtis told Packaging Council members that he appreciated that many of them felt the costs were understated:

"I have been challenged by people who know a lot more about the economics of operating container deposit systems than I do that the costs of implementing CDL are much higher than the Covec report states. However I have always taken the view that we are better to be conservative in our approach. What we can't get away from is that CDL would add millions to industry costs at a time when we are facing spiraling fuel and energy costs and taxes on waste and carbon. Whichever way you crunch these numbers they are way in excess of the $6 million mentioned in the Envision report. And by spending upwards of $50 million to implement the scheme, we would reduce waste to landfill by just 1.5%. It doesn't make sense."

The research also finds that current kerbside collections address the 60% of drinks containers which are consumed at home. A further 30% containers are consumed at restaurants and other entertainment venues and collected by recycling operators which leaves 10% drinks containers consumed whilst people are out and about.

Mr Curtis posed the question: "Isn't it far better to find a solution to help people do the right thing with their cans and bottles whilst they are out at the shops or in the park?"

The Packaging Council is an active member of the Ministry for the Environment's Recycling in Public Places Initiative Steering Group and is also investigating various models for involving the private sector in extending this initiative. Mr Curtis also announced a new vision and look for the Packaging Council with a new logo "Towards Sustainable Packaging."

Summary Information

Recycling rates have increased from 52% in 2006 to 57% in 2007

Annual cost:
First report: $61 - 121 million per annum
Revised report: $48 - 90 million per annum

Cost per additional tonne recycled:
First report: $1020 per tonne
Revised report: $1600 per tonne

Reduction in waste sent to landfill:
First report: 90,000 tonnes per annum
Revised report: 45,000 tonnes per annum

Independent Cost Benefit Analysis

Click here to download Covec’s revised 2008 report of the potential impacts of Container Deposit Legislation and compulsory take-back of all packaging by retailers, as allowed for by the Waste Minimisation (Solids) Bill as reported back by the Local Government & Environment Select Committee.

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EMAIL: pac.nz@packaging.org.nz