Spin the bottle: the fraught politics of container deposit schemes

In most states, the issue of container deposit legislation has festered for decades. Brian Finestone/Shutterstock.com

The New South Wales government’s announcement on Sunday that it will introduce a container deposit scheme in 2017 is the latest chapter in a tale that is longer and more controversial than many people realise.

It is more than 35 years since the then South Australian Premier Don Dunstan introduced legislation to require a 5c deposit to be paid on certain beverage containers, to encourage a greater recovery of used containers. The voluntary deposit schemes that supported reusable beer and soft drink bottles had fallen away as a result of the rise of single-use aluminium cans and plastic bottles. Littering increased, attracting the attention of the nascent environmental movement. I have a colleague who marched down Adelaide’s North Terrace at the time, in a “ban the can” rally.

Dunstan’s decision followed similar moves by the Oregon and Washington state governments in the US. Shortly afterwards the NSW government expressed interest, and was poised to follow South Australia’s lead.

But the beverage industry, concerned by the growing regulatory tide, acted swiftly to head this off in NSW. The arrangements that it negotiated have persisted in various forms ever since. The beverage and packaging industry have, over the years, provided modest funding for litter-reduction campaigns or initiatives to reduce packaging, in exchange for governments resisting calls to introduce a system which puts responsibility for recycling cans and bottles on the companies that make them. These industries have even helped some environmental and anti-litter groups to enlist support for campaigns against a container deposit scheme.

Picking up the issue

In 2000 I was commissioned by the then NSW environment minister Bob Debus to conduct an independent review of container deposit legislation. I concluded that there were significant net benefits arising from its implementation, a result that was mirrored by a similar study in the United States around the same time. 

The debate raised several interesting issues, not least the power and influence over public policy that some industry sectors were clearly capable of wielding.

Fast forward to last weekend, when NSW Premier Mike Baird and environment minister Rob Stokes announced their turnaround, despite strong lobbying by the beverage and packaging industry.

Decades of inertia

In the late 1970s, when South Australia took the lead, littering was the main issue. By the early 1990s the focus had shifted to reducing landfill and encouraging recycling. By the turn of the century, when we conducted our review, there was a recognition that the main benefits of recovering and reusing more containers was in helping to reduce the environmental damage done by manufacturing with raw materials.

This view was bolstered in 2001 by a major study, commissioned by the packaging industry, of the highly successful kerbside recycling system. It showed that even the relatively costly overheads associated with household kerbside recovery were justified by the economic benefits of avoiding these kinds of environmental issues.

Our study concluded that, if the recovery rate were doubled from around 45% by collecting the empty containers of drinks consumed away from home, then these benefits would be mirrored and even increased. This stands in contrast to other studies which only look at part of the picture, either by considering only the reduction in litter, or by failing to take into account the significant economic benefits in avoiding the unnecessary production of new materials.

Despite our review’s favourable findings, there was another stumbling block: the Mutual Recognition Act, which aims to ensure free trade in goods and services between states and has been used to prevent (for example) the ACT banning the sale of battery farmed eggs.

This Act was the basis for the challenge by Coca-Cola Amatil to the Northern Territory’s proposed container deposit scheme. It wasn’t until August 2013 that an exemption was granted, similar to the one that South Australia enjoys. It appears highly likely that the ACT will follow NSW’s lead, and that other states will also implement similar schemes. Tasmania and Western Australia have also reviewed the idea.

Lessons learned

For those with a professional interest in public policy, there is much to learn from this case study about the influence of the powerful lobby group that combines the soft drink, brewing and retail sectors. Initially, it negotiated with state governments to fund litter-reduction activities (“Do the right thing”) on the explicit understanding that container deposits would not be introduced, then later pushing schemes that pushed the responsibility onto ratepayers or were just voluntary, such as the Australian Packaging Covenant.

Yet most of these same companies operate in jurisdictions in Europe, the United States and Canada, where they quite satisfactorily work with deposit and refund schemes, in many cases running the system, making a margin on both the full and the empty containers. Perhaps the Australian industry’s reticence is borne of a fear that container deposits might open the way for more regulation down the track – of sugar and obesity, alcohol and violence, or more stringent product labelling.

It appears that, some 40 years after the first attempts, NSW will have deposits on drink containers, correcting a long-standing market failure and doubling the environmental benefits by doubling the recovery rate. At last, a greater responsibility will be placed on the producers and consumers of recyclable products to ensure that they are indeed recycled.

Reform can be slow, and it can be surprisingly controversial, but it can happen.