Waste export levy to be scrapped in federal budget after warnings 'recycling tax' would send more waste to landfill

A levy on waste exports that was set to be imposed this year will not go ahead. (ABC News: Mark Moore)

A so-called “recycling tax” due to be imposed on waste exporters will be scrapped as part of next week’s federal budget.

The waste industry expressed fears a proposed $4 per tonne levy on waste exports due to begin in July could send rubbish that would have been recycled to landfill instead.

The levy was legislated by the Morrison government in 2020 as part of laws to reduce and regulate waste exports after China caught Australia off guard by saying it would no longer handle Australian rubbish.

But a price was never set and was left to the Albanese government to determine when the final stage of the export ban would take effect.

In a submission ahead of the budget, the National Waste and Recycling Industry Council said the levy amounted to a “tax on the recycling industry” that would likely be passed onto local councils and consumers.

Now federal Environment Minister Tanya Plibersek says the government will formally reverse the legislated levy.

“Unlike the Liberals and Nationals, Labor listened to industry and will not be introducing a levy on waste exports,” Ms Plibersek said.

“We want to see more recycling and avoid waste going into landfill, which this levy would have caused.”

Scrapping levy part of Australia’s move to deal with its own waste

Australia has been seeking to reduce its reliance on recycling rubbish overseas since 2017 when China’s “Operation National Sword” policy left Australia without a buyer to process hundreds of thousands of tonnes of Australia’s waste.

Since glass, plastic and tyre exports were “banned” from export in 2021, the amount of that waste being sent offshore has been slashed from about 255,000 tonnes a year to less than 80,000 tonnes a year of regulated glass, plastic and tyre waste.

But more than 754,000 tonnes of paper and cardboard were still sent overseas last financial year, mostly to Indonesia, India and Malaysia.

Paper and cardboard waste is the last export due to be regulated, after the government invested $1 billion into a “Recycling Modernisation Fund” to upgrade facilities to be able to meet strict new contamination requirements.

In line with the final stage of export rules, recyclers were facing a proposed $4 per tonne charge on waste exports — with that final price due to be set in next week’s budget.

But after consulting with industry, the government concluded the charge could risk sending more waste to storage or even into landfill if it ended up more cost-effective to do so.

Australian Council of Recycling chief executive Suzanne Toumbourou said it was “common sense” not to tax recycling exports.

“What we really look forward to is a fuller review of the Recycling and Waste Reduction Act,” Ms Toumbourou said.

“When it comes to us producing [recycled] products that are fit for purpose that can reach markets … we need to incentivise that and accommodate more demand for that through any market, be it domestic or offshore.

Ms Toumbourou said it would have been counterproductive for the government to invest $1 billion in upgrading recycling facilities to then tax the trade of those recycled products.

The change also fits into the government’s wider strategy for more packaging waste to be “recovered, reused, recycled and reprocessed” domestically, with recycled content targets for supermarkets and other major waste-makers expected to be made mandatory from 2025.

But some industry figures have expressed concern they will still have to pay a licence fee to export waste at a cost of thousands of dollars, effectively leaving them in the same position.

Waste Management and Resource Recovery Association chief executive Gayle Sloan said it would add costs to recycled materials.

“I think it’s greatly disappointing that there is an additional charge being placed on recyclers that will be met by their customers, generally councils, to export what is a commodity that has not got a market or demand in Australia,” Ms Sloan said.

“It’s just going to add cost to what already is a fragile system.”

A Senate inquiry into Australia’s waste policies will begin its first hearing today.