Council rates hike looms due to recycling crisis

Liam Mannix
16 February 2018
AFR

Council rates will likely increase up to 5 per cent across Victoria as the state’s recycling crisis bites.

The Municipal Association of Victoria warns rates could increase between 1.1 and 2.5 per cent – on top of the 2.25 per cent state-mandated maximum rate rise.

The expected rates rise will be the result of the increased costs associated with dealing with the  recycling, whether it is decontaminated and shipped to China, or dumped in Victorian landfill.

According to the municipal association, any rates hike will go towards compensating recycling companies for the increased costs in decontaminating the material and sending it overseas.

However, the Victorian Waste Management Association says ratepayers will be covering the cost of sending more recycling to landfill, because the material can no longer be shipped in China like it once was. 

Victoria previously exported the vast majority of its recycling to China, where it was processed and recycled and used to fuel China’s factories. But in January, the Chinese government banned imports of low-quality recycling, causing a major crisis.

Previously, major recycling companies including Visy, SKM and Polytrade would pay councils about $60 to $70 a tonne for the contents of residents’ yellow bins. They would then sell it to China at a higher price.

Now unable to do that, it is understood recycling companies are charging councils a fee of roughly $60 a tonne to take the material.

As a result, councils are out of about pocket $120 per tonne of recycling material, municipal association chief executive Rob Spence said.

“It has become clear that the impacts will be statewide, with significant cost implications likely for all councils and ratepayers,” he said.

Addicted to cheap trash: the roots of our recycling crisis

In Victoria, council rate rises are currently limited to a maximum of 2.25 per cent a year, but waste charges are excluded from that cap.

The current cost implications of China’s recycling ban being discussed by recyclers would result in statewide rate rises up to 2.5 per cent, on top of the 2.25 per cent cap, Mr Spence said.

Councils across the state spend about $600 million a year on kerbside recycling, about 12 per cent of their total budgets.

Mr Spence said operators had told him they would use the extra funds to remove contaminants from the material, making it suitable for export to China.

But Victorian Waste Management Association boss Peter Anderson said the money would likely be spent covering the cost of dumping recycling in landfill. The state government charges about $63 for every tonne of rubbish sent to landfill.

“Everyone is going to charge councils to take the waste, that’s why the costs are going up. Because what they’ve got to do with it now is put it into landfill,” Mr Anderson said.

The Age understands the state government has been working on a solution to the crisis and councils were told to expect an announcement last week. That announcement did not come.

A spokesman for the Minister for Energy, Environment and Climate Change Lily D’Ambrosio said she was continuing to work with councils and industry “to ensure that confidence in Victoria’s recycling program is maintained”.

Frank Sullivan, vice president of Ratepayers Victoria, said councils were using a confected crisis as an excuse to drive up rates.

“They will tell you anything to justify rate rises,” he said.

“I’ve only read a bit of scaremongering on this issue in the papers. I’m sure there are ways to address it.