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Container Deposit System Impractical

27th November 2006

NEWS RELEASE

Container deposit legislation will cost millions of dollars to implement in New Zealand and will reduce waste to landfill by less than 3% according to an independent study

Container Deposit System Impractical

An independent study commissioned by the Packaging Council concludes that the net impact of introducing a mandatory container deposit system in New Zealand could cost up to $121 million per annum. If a product take-back scheme were applied to all consumer product packaging as allowed for in the Green’s Waste Minimisation (Solids) Bill, the net cost to the country would be of a similar magnitude.

Paul Curtis, Executive Director of the Packaging Council said that they commissioned the study understanding that New Zealanders like the idea of getting money back on beverage containers they have bought and returned however:

“Whilst the campaign for Container Deposit Legislation (CDL) appeals to the emotional argument for introducing legislation into New Zealand, all the evidence from studies overseas points to the huge, additional costs of such a system particularly when it sits alongside an already efficient kerbside recycling system. Those countries which have introduced CDL have primarily introduced it as a litter management solution or have introduced it prior to a kerbside system When 95% of New Zealanders have access to recycling facilities, introducing container deposit legislation would make no sense as it would compete with our existing collection systems for recyclables.”

“We also need to ask ourselves whether it is worth spending millions of dollars on addressing a single and relatively small part of the waste stream. Packaging waste represents only 12% of all waste to landfill and beverage containers a smaller proportion still. Industry is absolutely committed to achieving its recycling targets agreed under the Packaging Accord - and at a rate of 52% more packaging is now recycled than sent to landfill. However if we are seriously considering spending this sort of money wouldn’t it make more sense to focus on the waste making up the other 88% of the landfill?”

“If you look at the content of a landfill, the big ticket items are organic wastes such as garden wastes, kitchen waste food processing wastes and sewage sludge which make up about one third of all landfill waste. On top of this over three million tonnes of waste from building and demolition activities are disposed of to cleanfill sites every year. These represent two thirds of the problem. Whilst we continue to obsess about container deposit legislation, which would decrease waste to landfill by less than 3%, we are completely missing the big picture. The Government has already identified the priority wastes in its 2002 Waste Strategy but four years later, packaging still appears to remain the single focus, despite the fact that the amount of packaging recovered has increased by a staggering 116% since 1994 and we have one of the highest paper recovery rates in the world.”

The report by independent economic analysts Covec models the experience of container deposits overseas to the New Zealand geography and existing waste management framework. The analysis firstly examines how a deposit refund scheme such as operates in South Australia could be designed to be more efficient and uses this more efficient model as the basis of its cost estimates. Covec concluded that returning used beverage containers to supermarkets would be the most efficient model for New Zealand.

Even adopting the most cost effective solutions in practice around the world, the cost of implementing a container deposit system in New Zealand would be massive. The additional cost for every tonne recycled would be an average of $1020 per tonne or $65 per household, compared with an average cost of $60 per tonne for a kerbside collection service.

Container deposit systems are inherently more expensive than kerbside collection schemes due to the storage, transportation, processing and labour costs on top of the complexity of identifying containers by exact number (in order to pay refunds and process handling fees) and separating containers both by material type and by brand owner.

The Covec report estimates that the costs to New Zealanders of introducing CDL significantly outweigh the benefits. Although CDL would increase packaging recovery rates by 26% or 90,000 tonnes, this would only equate to a 2.6% decrease in waste to landfill, but at a cost of up to $121 million per annum and would cause a massive upheaval for supermarkets who would be required to process all of the returned packaging.

Mr Curtis added: “We believe that the costs outlined in the Covec report are extremely conservative based on our members’ own experience of CDL in Australia and the USA. Notwithstanding that the costs are huge by anybody’s terms of reference.”

“And it’s worth remembering that introducing CDL will not mean that beverage containers returned will be reused as drinks containers because the food safety standards required for manufacturers control the use of containers as a major food safety hazard. Any container used in the manufacturing process must meet stringent safety criteria with regard to fragments and to cleaning chemicals used in the recycling process. This effectively eliminates reuse of containers without major capital investment in processing recovered containers. We also do not have the economies of scale which larger countries have to process all of the recovered material which we currently recover.”

The report also highlights the huge resource required to manage CDL. For example, 2.9 million m3 of containers would be returned to supermarkets throughout New Zealand each year requiring so much floor space at each supermarket to store the returned packaging that the lost sales space would cost retailers and hence their customers $12 million per annum.

”All the evidence points to CDL being a 1970’s response to a modern-day problem but with 21st century costs and few benefits,” said Mr Curtis.

Ends

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