Packaging Council of New Zealand (Inc) : Questions and Answers

*	There is no formal decision to go ahead with a waste levy
*	There is preliminary work being done as requested by the Minister. This is to be forwarded to the Minister at the end of July
*	The preliminary advise to the Minister is “preliminary” only. At the moment we are working on the assumption that it will either be “go” or “no go”.
*	If it is “go” further work / consultation will be done.

QUESTION

JOHN WRIGHT – COCA-COLA AMATIL (NZ) LTD

When the levy was dropped in Christchurch it must have left a huge hole in the budget. How was that levy collected?

ANSWER

SARAH GORDON (RONZ)

This question has been taken out of context. The $4-500,000 deficit for the compost plant in its first 4 years of operation was covered by rates. This was later covered by the levy when implemented in ’98. It is now break even at 50% of refuse disposal rate due to increased disposal costs. Initially the disposal costs were $50/T and compost charge $25/T. Now disposal costs are $125/T and composting is $63/T, which is a more realistic cost for composting.

SIMON COLLIN (rep CHRISTCHURCH CITY COUNCIL)

*	The hole in the Christchurch budget is $3million. This money has funded waste management schemes.
*	There will need to be a 2% increase on top of the current rise of 9% in rates in Christchurch to make up the loss or, abandon waste minimisation scheme.

QUESTION

JOHN WRIGHT – COCA-COLA AMATIL (NZ) LTD

“This is just a tax for the Council! Council’s get 100% access to the funds in Year 1 and 75% access in Year 2 - why?”

ANSWER

SIMON COLLIN (rep CHRISTCHURCH CITY COUNCIL)

The development of the levy will mean a portion of the funds collected will go to local bodies to fund “costed” waste management plans. If not, the funds go into the “contestable fund”.

The proposal is that TLA’s only get the funds if they have a costed WM Plan. Many TLA’s will not have them in the first year, and unallocated revenue would go into the contestable fund, so there would be funds available in the contestable fund from year one. The reasoning behind this part of the proposal is that for those TLA’s who have got their costed plans up and running, some have been relying on a local levy to fund those activities, and that assumption is now embodied in their Long Term Council Community Plan. The judicial review has pulled the rug on that, so this was a potential way through the morass.

QUESTION / COMMENT

CRAIG FORMAN – RECYCLING COMMODITIES LTD

The levy distribution in Christchurch has distorted market competition by subsidising businesses which would not have otherwise survived.

ANSWER

SIMON COLLIN (rep CHRISTCHURCH CITY COUNCIL)

Not aware of any concerns expressed by CHCH manufacturers of market distortion. The levy charged in CHCH on refuse was $10/tonne and had created business opportunities. The levy of $9 / m3 on selected cleanfill material has provided an incentive that has resulted in 50,000 tonnes of material being diverted from cleanfill to recycling.

SARAH GORDON (RONZ)

The Sustainable Initiatives Fund (SIF) ($2/T of the Christchurch waste levy) is managed by an totally independent trust with strict funding criteria which includes not funding anything that would be in competition with existing businesses e.g. shown in presentation of ragging machine funded though low interest loan (now paid back) was a first for Christchurch and enabled waste textiles previously in waste stream to be ragged and blending in with waste wool to produce a range of insulation products i.e. it benefited textile manufacturers more in developing an alternate market for material out cuts etc. This particular fund is very transparent, contestable and information is available.

QUESTION

MURRAY PARRISH – CHH

The proposal is for 50% of the funds generated through a national levy to be distributed by the funds Governing Board to their “best use”, suggesting that the 50% given to Local Government must be for a ‘less than best’ use. Why not distribute 100% of funds on a contestable basis to the best use?

ANSWER

SIMON COLLIN (rep CHRISTCHURCH CITY COUNCIL)
The council proportion is up for scrutiny through the waste management plan process. In addition, as per the Christchurch example, the funds available to the council does not necessarily mean the council is using this to do waste activities themselves, but will likely also go through a robust tender process to ensure the funding is used for the best proposal.

QUESTION

BILL BERRY – PRESIDENT NZPPA / GM INTERPAC PACKAGING

When the second Accord was being negotiated the deal was that no levies / legislation would be applied UNLESS the packaged goods industry did not fulfil its obligations. Why the change to the deal when the Accord is working?

ANSWER

NIGEL IRONSIDE (MfE)

No decision has been made yet to progress with waste levies. preliminary work only is being done.

Thought that the primary context of threatened legislation was enforced Product Stewardship legislation such as CDL.

COMMENT – MURRAY PARRISH (CHH)

Under the Official Information Act – CHH had requested a copy of the threatened legislation and been advised that no legislation had in fact been drafted. Murray stated that his strong impression was that most industry participants understood the legislative alternative to the Packaging Accord was legislation in its broadest sense.

COMMENT – ALASDAIR THOMPSON (EMA)

If the Packaging Accord is a voluntary initiative, those parties signed up to it and enacting product stewardship schemes must be exempt from any waste levy. All 75 councils operate independently therefore this process must be worked through carefully.

COMMENT – MURRAY PARRISH (CHH)

Noted that some sectors within the Accord were not as up to speed as others. The sense of grievance is the approach LGNZ took after signing the Accord, then went their own way. The argument (by Terra Nova representative) that imposition of waste levies has been understood to be a power under the Local Government Act for a considerable period is brought into question by the recent decision of the High Court.

COMMENT - SARAH GORDON (RONZ)

In response to Bill Berry’s question that LGNZ signed Accord 2 and now seems to be reneging by pushing through national levies. Chronological reminder of key events: Accord 1 signed 1996 between Packaging Council and Central Government only. LGAA #4 enabling TLA’s to recover costs locally subject to developing waste management plans enacted in 1998. Accord 2 was signed by four parties, including LGNZ in 2004. While LGAA#4 is now deemed illegal, it was operating before Accord 2, and therefore Councils have not “reneged” on accord principals as waste levies (local or national is academic) were already in existence.

QUESTION

GRAHAME CHRISTIAN – STREETSMART

What are the key drivers to a national waste levy?

ANSWER

NIGEL IRONSIDE (MfE)

Clarification by the High Court, that the provision for local authorities to have local levies that were thought to be in the Local Government Act is illegal. Waste management – industry requirements for consistency across the country.

General public expectation that there will be waste diversion.

COMMENT – ALASDAIR THOMPSON (EMA)

Waste minimisation is not the goal. Was is, is better use of resources, efficiencies and profits.

QUESTION

SIMON COLLIN – LGNZ

Agreed with the above comment and asked … Does a waste levy not help the Accord and add an incentive to recycle?

ANSWER

PETER McELROY (AMCOR KIWI PACKAGING)
The Draft Proposal for a Waste Levy in New Zealand is too much of a “one size fits all” approach. Gradients need to be applied. Consultation is the key! The final drafting group need to sort out a hierarchy of waste materials focusing on those that are not recyclable and therefore continue to be placed in landfill.

SIMON COLLIN (rep CHRISTCHURCH CITY COUNCIL)

Commented that “gradience” runs the risk of bureaucracy!

QUESTION

DAVE PERKINS – RECYCLE NEW ZEALAND

Industry will generate the majority of funds so why should local government get half?

ANSWER

SIMON COLLIN (rep CHRISTCHURCH CITY COUNCIL)

Local authorities have a mandate to manage waste. They are required to have a waste management plan which goes through a consultation process.

Additional info: Rather more than a mandate Local Authorities are required under the Local Govt Act to have Waste Management Plans, and quoting from the Act:

Every waste management plan shall:
a)	Make provision for the collection and reduction, reuse, recycling, recovery, treatment, or disposal of waste in the district.
b)	Provide for its effective and efficient implementation, or for activities considered appropriate for that purpose to be undertaken by, or under contract to, the territorial authority.

It seems reasonable that some of the cost for those activities should come from a waste levy, rather than from rates.

COMMENT - ALASDAIR THOMPSON (EMA)

If LGNZ can do it better they can have it all and vice versa!

QUESTION

KEITH McCRACKEN – TETRA PAK NEW ZEALAND

Is it intended that the fund will be used to subsidise kerbside or domestic rubbish collection?

ANSWER

SIMON COLLIN (rep CHRISTCHURCH CITY COUNCIL)

Not domestic collection. There is disagreement as to funding kerbside. LGNZ are in favour and industry is not!

FURTHER QUESTIONS

HAS THE GOVERNMENT ABANDONED PLANS FOR PRODUCT STEWARDSHIP LEGISLATION?

NIGEL IRONSIDE (MfE)
The product stewardship policy development programme is on track. The Ministry will report to cabinet by the end of June. Following that, we will be coming back to stakeholders to continue the stakeholder engagement process.

The government remains very much committed to existing voluntary initiatives such as the Packaging Accord. The proposed framework for product stewardship is designed to support this type of voluntary arrangement. Waste levies may provide a fund to assist the setup of product stewardship schemes or support the development of recycling initiatives.

If you want to keep up to date with the developments around these issues, we would like to refer you to www.mfe.govt.nz/issues/waste where we have put up a new webpage with the latest information.

HOW DO YOU IMPOSE A VOLUNTARY LEVY?

ALASDAIR THOMPSON (EMA)
You don’t. All you can sensible do is impose a national levy and grant exemptions to those operating under a voluntary accord.

SIMON COLLIN (rep CHRISTCHURCH CITY COUNCIL)

With difficulty. I would only see that as a short term fix, as there is always the risk of freeloaders entering the industry in competition.

WASTE AS A WHOLE NEEDS FUNDING. IF THE LEVY FAILS

WILL THE GOVERNMENT PUT FUNDING INTO WASTE

GENERALLY AS IT DOES WITH ENERGY?

NIGEL IRONSIDE (MfE)
This is an issue that will need to be considered in any policy work.

WHO WILL SELECT THE GOVERNANCE BOARD?

ALASDAIR THOMPSON (EMA)
Good question. All government interventions have compliance costs. Why does it need a governance board? Why not have the Ministry for the Environment administer it according to sensible and clear rules?

SIMON COLLIN (rep CHRISTCHURCH CITY COUNCIL)

The proposal at present suggests the Minister.

WHERE WILL THE LINE BE DRAWN ON PAYMENTS

FROM THE FUND?
-   OPERATING EXPENSES?
-   CAPITAL EXPENDITURE FOR THE INITIATIVES?
-   INVESTIGATIVE FUNDS ONLY?

ALASDAIR THOMPSON (EMA)
Another good question. I would limit it to the investigative solutions and operating expenses (including depreciation). The capital costs (ultimately recovered in Opex) should be met by government.

SARAH GORDON (RONZ)
Personally I would expect there to be very strict criteria and total transparency on what the fund is used for both nationally and locally. Check out “Sustainable Victoria” on its reporting.

SIMON COLLIN (rep CHRISTCHURCH CITY COUNCIL)

The detail still to be worked through. I would advocate for simplicity, to keep bureaucratic cost down.

	TOWARDS SUSTAINABLE PACKAGING
	77 Greenmount Drive, East Tamaki, Manukau PO Box 58899, Greenmount, Auckland PHONE 09 271 4044, FAX 09 271 4041 EMAIL: pac.nz@packaging.org.nz