No reason for deposit scheme

Judith Sloan
June 11, 2013
The Australian

WHEN I was a girl, on the rare occasions we had soft drink (it was probably Tarax) my sister and I would trot down to the local milk bar to receive our refund (was it threepence? I can’t quite remember) for returning the empty glass bottle. It was part of our (small) world.

I tell this story because my guess is that many people’s support for container deposit legislation is based on some nostalgic view of a return to those simple days.

But having lived in South Australia for many years, I can tell you that modern container deposit schemes bear no resemblance to those early arrangements. Were you to bother to attempt to get your deposit back, you would need to get in the car and drive a great distance to one of the small number of licensed depots, queue up and receive your 10c per bottle or can.

Anything short of a bootload of bottles and cans would render the effort worthless. The vast majority of the population simply puts their empty bottles and cans in the recycling bin. The 10c is paid on each bottle and can; the 10c is lost on each bottle and can. Behaviour is unchanged but consumers bear the costs.

So what is it about politicians and container deposit legislation? And why do they routinely ignore the evidence on the inefficiency and ineffectiveness of these schemes?

Take this endorsement from Victorian Premier Denis Napthine.

“I support a container deposit scheme, but it will only be effective if it’s Australia-wide. I know the South Australian scheme as a stand-alone scheme has worked; I live right on the border and when you go into South Australia the roadsides are clean, the streets are clean.”
Sadly, Premier, just looking at road sides and streets does not constitute evidence, certainly not evidence suitable to implement a costly policy.

So what are the rationales for container deposit legislation? There are generally three reasons given:

• To increase the rate of recovery and recycling;
• To reduce littering;
• To provide a means of fund-raising for groups such as scouts and guides.

It is important to note CDL typically imposes deposits on beverage containers but there are often carve-outs, for example, wine bottles. Other non-beverage containers are also exempt.

The evidence on CDL does point to an increase in recovery rates of beverage containers. But as the Productivity Commission has noted, “the impact of CDL on overall recovery rates is unlikely to be great because beverage containers make a relatively minor contribution to the municipal waste system”.

Moreover, the increased recovery rates associated with CDL have to be seen in the context of existing kerbside collection of recyclable waste. Running dual systems adds extra costs and has a significant impact on the economics of kerbside collections. By diverting some items from kerbside recovery, some benefits of scale are lost.

A recent study by the Municipal Association of Victoria has estimated that, were CDL to be introduced, the volume of material in kerbside recycling could fall by nearly 20 per cent.

But as most councils are paid for recycled material to be processed, the estimated loss of revenue for local governments in Victoria is close to $300,000 a year in the first five years. After 10 years, the estimated annual loss is close to $850,000.

Then there are the direct costs of running CDL schemes. These include: establishing the depots for collection and processing; the operating costs of the depots; the costs borne by householders returning the containers; the costs of handling, sorting and processing; and government costs of administering.

The Productivity Commission cites figures that show that the all-up costs of recovering beverage containers through CDL ranged between $1200 and $2200 a tonne. These costs compared with market prices for recycled glass of $72/tonne and $1100/tonne for recycled aluminium.
When it comes to littering, the evidence does not favour the introduction of CDL, in part because the proportion of litter that is made up of beverage containers is relatively small.

While it is true that the evidence from SA suggests there is less littering of beverage containers, the extent of littering of other items, including bottle tops, is the same or even greater in that state compared with the other states.

One US study found that, without CDL, one in 164 containers finds its way into the litter stream. The costs of CDL on the 164 containers are borne to prevent one container from becoming litter.

By comparison, targeted advertising and litter pick-up programs are much more cost-effective means of reducing the extent of litter.
More generally, the research is clear that littering is essentially a behavioural issue that can be addressed through advertising campaigns and public education.

And what of the last objective, assisting in fund-raising efforts? Again, this may be a throwback to those lazy, hazy days when we collected milk bottle tops, stamps and toothpaste tubes so the school could raise money to fund good causes.

Is the idea that young children roam the streets or sporting events collecting empty bottles and cans to amass a large number of containers?

At this point, the scout or guide leader gets in the car to travel to the nearest depot — possible 20, 30 or 40km away — to collect $100 on the 1000 containers collected by the team.

If this really is the rationale for CDL, I can think of many alternative (and more enjoyable) fund-raising activities for our young fry that do not involve the flagrant waste of taxpayers’ monies on a scheme that does not meet any sensible cost-benefit test.