Marlborough District Council is looking at the opportunities for waste and cost reduction through product stewardship. Alec McNeil says the larger question is, who should pay?
Like other territorial authorities, Marlborough District Council (MDC) is required by law to promote effective and efficient waste management and minimisation within its district. It has met this obligation by developing region-wide council-owned infrastructure, serviced by private sector contracts, providing the community with various options for dealing with its rubbish and recycling.
Unlike many other councils, MDC deals with virtually all the material from the region’s household, commercial and industrial waste streams. This ensures that it can direct the flow of waste where it has options other than its landfill. Open book reporting on fees and charges provides transparency to the community and ensures all sectors are treated equitably.
After a decade spent establishing the current arrangements, and while continuing to divert as much material as possible, council is now looking at the opportunities for waste and cost reduction through product stewardship.
Marlborough has actively supported voluntary product stewardship schemes such as Agrecovery. The growth in recovered volumes through this programme has been achieved by raising awareness across primary industries and rural communities.
This levy-funded approach by brand owners shows how product stewardship can work well when the producers of the product link with the retail distributors, agricultural contractors, consumers, waste collectors, recycling processors and local authorities.
The challenge now is to replicate this approach to capture everyday consumer products and packaging.
The cost associated with products and their end-of-life treatment has been externalised from business and socialised across the community in the form of rate-funded infrastructure and services. This approach is unsustainable in the longer term if we want to reset the balance between economic activity and environmental impact.
Innovation can provide business with a unique selling point and subsequent growth in market share. The challenge is what part, if any, policy settings can have in creating an environment where business will take the lead in reducing waste associated with products and packaging.
Subsidisation has always played a part in economic activity but this should lead to innovation and opportunity, not the displacement of cost.
The commodity markets for diverted products have always been volatile but the principle of diversion remains unaltered – it’s about quality. The recent reduction in access to Chinese recycling and reprocessing markets has caused a number of countries to reflect on the quality of their products and their collection and processing systems.
It has been a wake-up call for them. They’re realising that the status quo is not sustainable and has probably not been serving the wider environment for a number of years.
In this country, the legislative mechanism for product stewardship is already in place through the Waste Minimisation Act 2008. The debate is over whether individual schemes should be mandatory or voluntary and who should pay – the taxpayer, ratepayer or producer / consumer.
The voluntary approach taken to date may serve the private interests of individual organisations recovering products specific to their brand. But that still leaves the municipal sector to deal with the rest of their competitors’ products.
Is product stewardship, used as a market advantage, serving the societal good?
Mandatory schemes, while potentially removing market advantage, can be used to incentivise a sector to reduce waste by design. Converting a product and its packaging to be recyclable may not be the optimum response if reduction is the goal being sought. This leads to the question: is recycling a failed market response to consumption?
Ratepayer-funded services are not without their advantage, depending on the procurement approach available to the local authority. This procurement approach can drive down the unit cost to householders and provide the private sector service providers with a guaranteed volume and surety of payment.
Does this payment have to come from the ratepayer, though? Would an even greater advantage be achieved by aggregating the cost of waste across all taxpayers?
Taxes collected centrally and distributed across the areas that we as a society have agreed to fund is one of the functions of government. Would this work in practice for waste and is it already happening to a certain extent?
” Is recycling a failed market response to consumption? “
For example, the waste disposal levy could be viewed as a tax that is collected centrally and redistributed across the country.
The advantage of this approach is the targeting of this tax to a specific area rather than absorbing it into the general exchequer.
The disadvantage is the inequity of distribution. Who is best placed to determine how this tax is deployed from a strategic and operational perspective to reduce waste as well as divert it?
That brings us back to the issue of influence.
The challenge of reducing waste in a consumption-driven economy is simply a debate on the status quo. With all change, those who challenge the status quo run the risk of being marginalised. The voice of the activist is drowned out by the needs of business. The ability for business to survive and grow is offset against the role of regulatory environment.
There is a middle ground here; an opportunity to create the settings that encourage innovation and entrepreneurship while reassessing where the true cost of waste should lie.
Like all local authorities, Marlborough is facing a growing expectation from its community that it will provide equity of service across the district without a noticeable increase in cost.
Recycling will continue to be part of our response but it is waste reduction that will change the status quo and this must involve the private sector. Those who produce the goods that we all consume have an extraordinary innovation opportunity to re-set the waste streams of the future.
Switching the cost of waste to the product and the packaging will nudge the private sector towards increased reduction, recovery and recycling, leading in turn to new opportunities in the waste industry.
There is a fear that any public sector-led scheme could be financially and administratively inefficient. There are two aspects to the product stewardship approach; firstly the management of the programme and secondly the operation of the programme. Should these aspects be subject to a competitive market response?
The market brings competition but that can be limited by the size of the opportunity. Identifying the point at which the private sector can achieve its margin is an issue. Maximising the opportunity for reduction, recovery and recycling may be best served by allowing the programme manager to operate in a not-for-profit environment.
Their focus would be driven by the goal of aggregating the effectiveness of the product stewardship scheme in achieving agreed objectives rather than creating a margin return for their own private interest.
This would leave the market free to compete for the operational response and the pursuit of profit through innovation and entrepreneurship.
Funding these product stewardship schemes would be achieved by placing a levy on the product and its associated packaging, resulting in a shift of the cost from public to the private interest.
The strategic objectives in the programme management would address the principles of reduction, recovery and recycling by establishing a sustainable system that has scale.
The market would then have the option of responding, based on this redefined status quo and reduced waste stream.
• Alec McNeil is solid waste manager at Marlborough District Council. Alec.McNeil@marlborough.govt.nz
This article was first published in the May 2018 issue of NZ Local Government Magazine.