Waste and circular economy

Advocacy priorities:

Unsustainable levels of waste and market failures require urgent action by the Victorian Government to support local governments establish sustainable waste practices.

Market failures have come to fruition as a result of a range of factors, these include:

In order to tackle the problem of waste massive behavioral change is required. Change can be polarizing within the community, however there is a need to proactively increase community capacity to change behaviors in this space given the increasing amounts of waste, hidden high levels of contamination, and the mandated change being implemented across the state. Unless behaviors around waste change, the new mandated system will be plagued by contamination issues.

The Victorian waste and recycling sector is experiencing a period of unparalleled change. The Victorian Government has announced major sector reforms which aim to modernise and improve the viability and sustainability of the sector. However, these reforms come at a great cost and the associated costs for local government will increase over the following decade.

The Victorian Government have indicated funding support but at very low levels (less than 20% of estimated cost impact for some inner metro councils).

Eight Victorian Councils do not have a separate waste service charge. Among the M9 Councils this includes Melbourne, Yarra, Darebin and Port Phillip. These councils must absorb any increase in waste costs through capped general rates. The introduction of a separate waste charge, however, is a very complex and carries significant risks.

Victorian Government Circular Economy Policy requires local governments to roll out a Glass service by 2027 and FOGO service by 2030. However, local processing markets are very limited and export bans for some types of recycled material commenced 1 July 2021 and will continue up to 1 July 2024.

The Municipal and Industrial Waste Levy (MIWL) paid to the Environment Protection Authority (EPA) is a price on every tonne of waste that goes to landfill. This is proposed to increase annually, well above CPI – approximately doubling over a three year period. Levies raised are held in what is known as the Sustainability Fund, which supports businesses, local governments and communities through a range of waste management, recycling, resource efficiency and climate change programs. The savings from levies will only partly offset the cost of implementing any FOGO service.

FOGO presents the largest single stream that can reduce landfill. The Metropolitan Waste and Resource Recovery estimates 30-50% decrease in landfill volumes if FOGO is recovered.

FOGO capacity will be reached in 2022 based on transition plans (and pending no further changes). Victorian Government has a plan to invest in market development, but there will be a lag time; possibly years until this creates additional market capacity.

Market failure presents an opportunity for Councils to explore the introduction of a closed loop whereby municipal FOGO volumes are collated, a FOGO processing facility is established (via joint venture) and demand for the end-product is significantly increased through leveraging specifications in supply chains.

The Victorian Government is also prioritising glass collections/processing under their Circular Economy Policy. Victorian Government are providing contributory funding for the roll out of Glass service (via transition plans).

It is proposed that the Sustainability Fund exclusively reinvest the funds collected from local governments via Municipal and Industrial Waste Levy to address the roll out of the four-service model. This should not be at the expense of other initiatives the Sustainability Fund also support beyond this scope.

More flexible FOGO funding models that support the likes of joint ventures, and behavioral change initiatives that assist with a seamless transition for residents is also essential to ensure M9 Councils are best placed for success.