The South Australia government will increase its solid waste levy from $100 per tonne to $140 per tonne in just over six months, which has some in the waste industry displeased as it gives businesses little time to respond.
There are also fears householders and businesses will bear the brunt of the costs as councils could be forced to increase rates.
On June 18, the SA government announced the levy increase in its 2019/20 State Budget. The solid waste levy will increase to $110 per tonne on July 1, followed by $140 per tonne on January 1, 2020.
In response to the announcement, Waste Management and Resource Recovery Association of Australia (WMRR) CEO, Gayle Sloan, said the waste industry has been “blindsided” by the announcement as the levy was previously expected to increase by $3.
“The timing and notice of this new levy increase is completely unsatisfactory – it does not allow businesses and local government with locked in 2019/20 budgets to prepare for this additional cost and it does not allow time for implementation of increased resource recover measures.
“Industry supports all government action that promotes resource recovery and market development, however it is not as simple as drastically increasing landfill levies,” Sloan said.
She said that while SA has led the way nationally in resource recovery, this increase is on top of a raft of new and increased costs hitting industry, which includes increased licensing fees and new financial assurance requirements.
“[This is] all adding to the cost and challenges that our essential industry is already facing.”
Sloan suggested the SA government should take note of Queensland’s model for implementing a rapid change in levy amount.
“The Queensland government also looked to implement such a change on 1 January, however this was moved to 1 July and a years’ notice of such change given, and mechanisms put in place to manage such a large impact on councils and households. There is no such notice or mechanisms apparently planned in SA.
“SA could also use this as a model for providing levy relief to MRFs and remanufacturers.”
Adelaide’s Lord Mayor, Sandy Verschoor, said the council was “very concerned” about the announcement of the levy increase.
“These waste levies are a state government tax that we are forced to collect from ratepayers and have increased alarmingly in recent years.
“While overall, this is a budget that will help promote employment and economic growth in the City of Adelaide, [the] council will continue to advocate for our community on initiatives which haven’t been funded.”
SA Best described the increase as an “exorbitant waste levy hit”, with SA Best’s Treasury and Budget spokesman, Frank Pangallo, explaining that the SA government was treating local government and ratepayers “with complete and utter contempt”.
“There is simply no justification for such an extravagant and over the top hike in the waste levy.
“The fund isn’t depleted. It’s bursting with money which is being spent on other government programs,” Pangallo said.
He said householders and businesses will bear the brunt of a 40 per cent hike with fears the increase will be on-passed via council rates.
Waste and Recycling Industry Association of South Australia (WRISA) executive officer, Chris Brideson, said there are some WRISA members, from the resource recovery sector, would see advantages to a substantial increase in the levy.
“At the other end of the spectrum, landfill operators could see a decrease in their gate revenue.
“On balance, I guess most people will just work with it.”
He said the increase in January, while substantial, gives WRISA members enough time to communicate with their clients, but it could still have an effect on companies who have set budgets for the year.
“Whether it’s enough time for the impact on people’s operations remains to be seen,” Brideson said.
A statement from the SA government explained that the solid waste levy increase would provide a strong signal that all efforts should be made to reduce landfill through recycling or resource recovery.
The government will use the levy increase to fund significant environmental projects with the 2019/20 State Budget, including more than $64 million of new funding towards practical environmental action including waste management and coastal protection.
SA Minister for Environment and Water, David Speirs, said landfill is one of the most significant contributors to greenhouse gas emissions that are incredibly harmful to the climate, so more action is needed.
“We need to send a strong message that more needs to be done to reduce these damaging emissions and that councils need to have the tools to divert more for resource recovery and continue moving South Australia towards a truly circular economy.”
The waste management and resource recovery industry employs about 4,800 people, which Spiers said is a figure the government aims to grow.
“For every 10,000 tonnes of waste recycled there are 9.2 full time jobs created compared to 2.8 jobs when sent to landfill.
“As it stands as much as 40 per cent of the material in our household waste bins sent to landfill is food and organic waste, which could be diverted through the organics bin.”
WMRR recognises that a landfill levy is an integral part of a successful waste and resource recovery policy framework, but there were fears a large increase without policy support had the potential to lead to unintended outcomes such as illegal dumping.
“A good levy is a certain levy with telegraphed changes that industry can plan for and respond to,” Sloan said.
“Industry has been trying to create market demand for recyclables, the minister has effectively with this increase given industry six months to make it happen. We call on government to demonstrate leadership and mandate recycled procurement for all government agencies at all levels now.
“We call on SA to continue to be a leader in Australia and implement sustainable procurement policies now,” Sloan said.
Speirs explained that through better collection systems, infrastructure and education, by 2020 the SA government aimed to have a 35 per cent reduction in waste to landfill when compared to 2003 figures.
“China’s National Sword Policy has provided the industry with a challenge but this funding package on top of support already provided in last year’s State Budget will help modernise and transition our resource recovery sector,” he said.
Funding within the SA State Budget 2019/20
The State Budget will deliver $12m of new funding over four years to the Waste and Resource Recovery Modernisation and Council Transition Package, which aims to boost recycling and resource recovery and keep waste out of landfill through investment, infrastructure, education and modernisation of council and industry collection services.
Funding also includes a $12.4m support package announced in 2018 to help the recycling industry and local government in response to China’s National Sword Policy.
Inside Waste has contact the SA government for further comment.