13 October 2020

Budget 2020 – $250 million boost for Australia’s recycling infrastructure

The 2020-21 budget is out and for the first time, the Commonwealth identified the waste sector as one of the 6 (yes 6 only) sectors for focussed job creation. MRA's Mike Ritchie reviewed the budget noting some important points.

By: Mike Ritchie, MRA Consulting Group

*Where taxpayers’ money is spent (2020-21)*

Josh Frydenberg has allocated $250 million to modernise Australia’s recycling infrastructure in last week’s budget.

The funding is designed to support the Government’s Target of 80% diversion from landfill by 2030. This Target has been endorsed by all State, Territory and Local Governments.

The stimulus plan over four years includes $190 million for a new Recycling Modernisation Fund which anticipates an industry co-contribution of $600 million.

A further $24.6 m has been provided to improve waste data while $35 m has been allocated to supporting the National Waste Policy Action Plan.

The expectation is for an additional 645,000 tonnes to be diverted from landfill and to increase jobs in recycling by about 10,000.

The recent attention on waste and recycling by the Government is welcomed by the recycling and waste sector.

Trevor Evans (Commonwealth Minister for Recycling) is the lynch-pin. He is energetic and intelligent. He understands waste economics. That is a rare Minister and one that the sector has not had for a very long time. It probably also helps that the Treasurer is an ex Environment Minister as well.

I just hope that this gives the Government renewed enthusiasm for waste reform. We are a $15 billion industry representing 2% of the economy and already provide 56,000 jobs.

Job creation in our sector is relatively simple and cost effective. 10,000 new jobs and 645,000t is a great start but there is much more to do.

To put it in context, that 645,000t/yr is only 5% of the growth in recycling we need to achieve by 2030 (in 9 short years) to hit the 80% target. To hit that Target we need to grow recycling by at least 12MT per year. So there is another 11.4MT per year that we need to identify and divert from landfill. And build the infrastructure, sorting facilities etc to achieve that in 9 years.

So the Commonwealth has brought recycling in from the cold. It has identified the sector as one of the 6 (yes 6 only) sectors for focussed job creation as part of the budget. It has laid out the challenge to the States. Now the States need to step up with reform of their own.

For example, if we mandated Food Organics and Garden Organics (FOGO) recycling in all States and Territories we would create an additional 9,000 jobs and many of these in regional areas. We could divert up to 7MT of Food alone from landfill.

If we recovered the 6MT of masonry that still goes to landfill we would generate almost 1,000 jobs.

One Energy from Waste plant generates over 600 jobs during construction and over 50 for ongoing operation.

Recycling generates 3-4 jobs for every 1 job in landfilling. Yet we landfill 20MT of materials that should be available for recycling.

If we did nothing more than price landfills correctly (to cover their externality costs) via landfill levies, then the recycling jobs would grow themselves. That is the magic of the market. Companies will invest and grow jobs because they can make profit in recycling. Most of the 20MT that we landfill now happens because companies cannot compete with underpriced landfills.

To put it another way, cheap landfills act like indiscriminate vacuum cleaners. The cheaper the price the more suction they exert and they don’t mind sucking up recyclables just as easily as residual waste.

So to grow a truly circular economy where we reuse stuff and minimise waste, we need to change the economics. That means either pricing landfills properly or continually subsidising recycling so that it can compete with cheap landfills. Only States have the power to do that.

States need to review their strategies and plans urgently. How will they achieve 80% diversion from landfill in only 9 years? How will they achieve their part of the 12MT of additional recycling. It won’t happen by itself. There needs to be root and branch reform of waste economics in Australia. Recycling should be the default position both from a policy and an economic position. It is not currently.The Commonwealth has started the ball rolling. Now it is up to the State Governments to follow through.

As always, we welcome your feedback on this, or any other topic on ‘The Tipping Point’.

This article has been published by the following media outlets: