A Case of Right Analysis, Wrong Solution

I have serious doubts about the claims the NSW Government is losing $100 million in landfill levy money at present and that this could grow to $200 million quickly.

The solution is the reintroduction of a Queensland levy.

At a NSW landfill levy of $95.20/t for the NSW Government to be losing $100 million – that equates to more than 1 million tonnes venturing north per year right now.

That is clearly overstating the case. That equates to 80 truck movements per day 365 days per year. No-one is quite sure what tonnages are travelling – we know about Barangaroo soils, metal shredder floc and some other C&D streams, but it is nothing like 1 million tonnes. A tenth or a fifth of that, perhaps.

That said, there is a case for action on aligning public policy settings between the two states. But the answer is NOT to reduce the NSW levy. Reducing the NSW levy now would send a regressive signal to the recycling sector and the many companies who have recycling and resource recovery investments in the pipeline. The answer is reintroduce a Queensland levy (and to provide rebates on the existing levy burden to legitimate recyclers in NSW).

Transporting to Queensland is a poor use of diesel and increases traffic on our highways but it is a rational profit maximising action that takes account of the prevailing public policy settings.

Don’t blame the recyclers and waste companies for transporting materials to the best market. It is no different to exporting plastic to China or Indonesia to get the best return, or shipping mangoes from far north Queensland to the Sydney markets to maximise profit.

This is a function of the Queensland Government removing the $35/t waste levy – simple as that. The sooner they reintroduce a levy and use the funds stimulate the recycling sector in Queensland, the sooner this issue will be fixed.

Yes the previous Queensland government created a bit of a monster with its $35/t levy only applying to C&I and C&D waste (and not household MSW) but in removing it, the new Newman Government has created this cross border arbitrage opportunity. It is C&I and C&D wastes that are migrating now. And yes it will continue to grow until the price differential is reduced.

Landfill in SE Queensland is ridiculously cheap now. Why would companies recycle when they can landfill for less than $20/t and sometimes less than $10/t. Other than paper and metal recycling, all recycling in Australia is subsidised by someone and costs a lot more than $20/t. If we are serious about reducing transport of waste from Sydney to Brisbane, then the only answer is to price landfills at their real cost and to use levies (or regulation) where the market can’t do it itself.

Clearly there is an overwhelming public policy argument for the Newman Government to look seriously at the effect of its levy policy. It needs to sit down with the Queensland Local Government and Shires Association (LGAQ) and work out a compromise levy position.

As an aside, if a Queensland levy was applied across all waste streams, then two thirds of it is paid by the private sector (which generates two thirds of the waste to landfill). If it was 100% hypothecated to local government, then for every $1 paid by local government in levy penalties, they would receive $3 back. Not a bad investment on anyone’s terms.

It has always amazed me that so many local governments either don’t understand that point and still oppose hypothecated levies. It should not be beyond the Newman Government and the LGAQ to find a solution that reinvests the Queensland levy monies in local government, creates a sustainable revenue stream for Councils and stimulates significant investment in the recycling industry in Queensland. A win/win/win.

There is some serious thinking to be done in Queensland. Happy to assist.