South Australia considers ‘Pay as you throw’ scheme

Australian_banknotes_in_walletSouth Australia’s suggested waste management reforms as set out in ‘Reforming waste management – Creating certainty for an industry to grow’ discusses the concept of ‘Pay as you throw’ or ‘Save as you throw’ variable rate pricing for waste services.

The basics are to provide variable pricing based on the volume of the bin or the weight of waste in it. These models, commonly used in the USA, have shown reductions in waste generation of up to 30%. Variable pricing can also be used to reward recycling by imposing a higher charge on waste and a rebate on recycling.

The three pillars of an effective variable rate pricing system are:

  • Identification – for accountability of the waste generator;
  • Measurement – of the waste generated and/or services obtained; and
  • Unit pricing – for charging the individual or organisation according to the service.

Variable pricing systems overseas are often based on one of the following:

  • Weighing waste in bins;
  • Pre-paid bags, tags or stickers; and
  • Pricing different volumes of bins.

Many Australian Councils now use variable pricing for different sizes of garbage bins.

The reported benefits of such systems include:

  • 25-45% less weight of waste to landfill;
  • Reduced overall waste management costs;
  • Increased waste prevention through behaviour change of residents;
  • Increased participation in composting and recycling programs;
  • More equitable waste management fee structure; and
  • Increased environmental awareness.

However, the South Australian paper also identifies barriers:

  • Misperception of increased illegal dumping – this has been less of a concern than anticipated;
  • Increased administrative costs;
  • Uneven cash flow as revenue generation is variable – prices must be set to cover the provision of all general and special collection services;
  • Perception of increased costs;
  • Difficulties in introducing to high-density or multi-family housing; and
  • Overcoming public’s resistance to change of the established flat fee pricing model.

The paper also identifies that though measurement of the weight of waste within the C&I sector has been occurring for over 10 years in Australia using front-lift vehicles equipped with load cells, most of these systems are not Licensed for Trade (LFT) as required by the National Measurement Institute. As such they cannot (and should not) be legally used for weight-based charging.

MRA’s advice to clients depends on the use. In the case of councils we advise using weight based systems for education and community engagement but not for charging – yet. We think that the risks are too high at present and that the community needs time to understand weight based charging for garbage.

In the C&I space however we encourage both businesses and waste service providers to enter the space quickly. Some companies are already rolling out NMI approved systems and we see a wave of change just over the horizon. Those who move quickly will benefit the most, in our view.

So it is interesting to see South Australia, which with NSW and Vic has always been at the front of the pack of waste reform, looking seriously at weight based and variable charging.

As always I look forward to hearing your thoughts.

MRA works nationally with waste generators, recyclers and local councils. MRA is conducting a Front Lift Trial for weight based charging in the Hunter Valley, funded by the NSW EPA. For further information, contact info@mraconsulting.com.au.