In January 2026, the Productivity Commission released Australia’s Circular Economy: Unlocking the Opportunities — an inquiry tasked with identifying ways to improve Australia’s materials productivity and support the transition to a circular economy. While it contains practical observations about barriers and opportunities, it falls short of identifying what is required to shift Australia from a linear, to a circular economic model. A circular economy moves beyond the traditional “take-make-dispose” model. Internationally, circular economy policy is recognised not as waste reform, but as economic and climate reform. The reason for this is clear: material extraction and processing are major drivers of global greenhouse gas emissions.
The Circularity Gap Report estimates that around 70 per cent of global greenhouse gas emissions are linked to material handling and use, including extraction, processing, manufacturing, and disposal. Analysis by the Ellen MacArthur Foundation found that 45 per cent of global emissions arise from the production of materials and products. The OECD and the UN International Resource Panel similarly conclude that resource extraction and processing account for approximately half of global emissions.
In Australia’s drive to decarbonise the electricity grid, this component of the net zero challenge has received little regulatory attention, including in the recently adopted federal Net Zero plans. Electrification alone cannot, and will not, deliver net zero if material throughput continues to grow unchecked.
Australia’s National Circular Economy Framework adopted in 2024, set ambitious targets, including increasing material productivity by 30 per cent by 2035 and reducing per capita material footprint by 10 per cent by 2035. However, Australia’s broader net zero planning has been largely silent on the role of the waste and resource recovery industry in delivering emissions reductions through avoided extraction, prolonging material life and embodied carbon savings. Without consistent national regulation and legislative backing, achieving these targets will be challenging.
The Commission does however identify genuine barriers to circularity, including:
- Regulatory inconsistency across jurisdictions.
- Weak market signals for recycled materials.
- Investment uncertainty for such business models.
- Underdeveloped product stewardship set ups.
It also calls for regulatory streamlining, stronger product stewardship schemes, and improved coordination between governments.
Extended Producer Responsibility (EPR), widely used internationally, has proven effective in shifting responsibility upstream to those that make these products and incentivising better product design. Strengthening stewardship for emerging waste streams – such as batteries and photovoltaic panels – is important. However, recognising barriers is not the same as recommending systemic reform.
The report frames circularity primarily as an issue of improving materials productivity and removing regulatory inefficiencies. While important, this framing underestimates the structural transformation required. A genuine circular transition requires:
- Enforceable national targets embedded in legislation.
- Mandatory eco-design and durability standards.
- Recycled content requirements.
- Integration of circular principles into climate and industrial policy.
- A coherent federal framework aligning state and territory regulation.
Regrettably, the Productivity Commission did not recommend the establishment of a dedicated national Circular Economy Act or other binding legislative mechanism. Instead, it emphasised coordination and incremental reform. In a federated system where environmental regulation is fragmented, harmonisation without legislative mandate has led to uneven implementation and slow reform. Businesses are left navigating inconsistent obligations and weak investment signals.
We have seen this dynamic before – including in the rollout of waste export restrictions, where policy ambition was not matched with domestic market development, procurement reform, or design standards to support Australian recycled content.
The Circular Economy Ministerial Advisory Group (CEMAG), established in 2023, delivered a systems-based roadmap in The Circular Advantage. CEMAG recommended:
- Clear national targets and timelines.
- Legislative reform to embed circular economy principles.
- Regulatory standards for circular product design and recycled content.
- Leveraging government procurement to create demand.
- Alignment of circular economy measures with emissions reduction strategies.
These recommendations recognise circularity as economic reform, not environmental housekeeping. While the Productivity Commission references elements of the national framework, it does not fully embrace the legislative ambition or systemic integration proposed by CEMAG. This is a missed opportunity to consolidate advisory work into coherent reform. Material productivity – economic output per unit of material input – is a key measure of efficiency. And one the current government is rightly obsessed. OECD data shows Australia lags many comparable economies on this metric. Improving material productivity requires structural shifts in production systems, product design, procurement practices; and consumption patterns.
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Voluntary measures and fragmented regulation will not drive economy-wide transformation at the pace required. However national legislation could:
- Provide long-term investment certainty.
- Set uniform product and design standards.
- Mandate (comprehensive) EPR schemes.
- Embed recycled content obligations.
- Establish enforceable reporting and accountability.
International experience demonstrates that jurisdictions embedding circularity into law – including through mandatory EPR and eco-design standards – achieve consistent outcomes than those relying on guidance alone. The reality is that circular economy reform are linked to climate performance. Extracting and processing raw materials account for a substantial share of global emissions. Retaining materials in use reduces demand for virgin extraction and lowers embodied carbon across supply chains.
Australia remains dependent on material extraction and export. If Australia fails to lift material productivity and circularity, it will face compounding risks, such as:
- Difficulty meeting national resource recovery targets.
- Reduced competitiveness in a global economy increasingly valuing circular performance.
- Exposure to carbon border mechanisms and embodied emissions scrutiny.
- Increased strain on domestic infrastructure and ecosystems.
Circular reform must be viewed as central to industrial and climate strategy. The Productivity Commission report provides useful analysis of barriers and opportunities. However, it stops short of recommending the structural, legislative reform required to embed circularity into our economic architecture. At a time when Australia has articulated national circular targets and received comprehensive systems advice, the Commission should reinforce the need for binding national legislation and integrated policy reform. Instead, it has proposed incremental adjustments. In a federation where fragmented regulation has long slowed environmental reform, incrementalism is unlikely to deliver change at scale.
I look forward to seeing you at WMRR’s 2026 ENVIRO Circular Economy Conference in Adelaide in June where we will push for action not just words.