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hankfully, consultations on the proposed new Covenant are all but over. While there are still a few loose ends to be tied up, the major issues have either been resolved - or - in the case of targets - the differences clearly defined. Click here to read the final draft of the proposed new Covenant.
I would particularly draw members attention to Schedule 2 which contains the Environmental Goals, Overarching Targets and Key Performance Indicators for all signatories.
Cabinet submissions are now being prepared by the various Commonwealth, State and Territory officials for their Governments consideration over the next few weeks. Following Cabinet decisions, the Environment Protection and Heritage Council (EPHC) will meet in Perth on July 1 at which Ministers will, hopefully, approve the Covenant proposal.
Ahead of final Government consideration of the Covenant package, industry representatives have commenced a round of meetings with senior officials and Ministers to reiterate industry support for the draft Covenant and to outline what will be required of all Covenant participants to make it a success.
Targets
The setting of appropriate targets has been one of the most difficult aspects of the consultations on the proposed new Covenant. At the December 2004 EPHC meeting, Ministers said they wanted targets (Click here to read Packaging Expose 10/04). More recently, Ministers Thwaites (Victoria) and Debus (NSW) have publicly declared their support for an overall 65% recycling target.
In a statement finalised in late May (Click here to read) industry representatives declared that Covenant participants should “aspire” to increase the overall recycling rate to 60-65% by 2010 (the current recycling rate is approx. 48%). Achievement of such an "aspirational" target, would ensure Australia was ahead of world's best practice in delivering recycling in a cost-effective manner.
To achieve an overall recycling target of 60-65%, indicative recovery rates by packaging material would need to be of the following order:
- Paper and cardboard – 70-80%
- Glass – 50-60%
- Steel – 60-65%
- Aluminium – 70-75%
- Plastics - 30-35%
Opportunities also exist to increase the recycling of packaging which currently is either not recycled or recycled at low rates from the existing 10% rate to 25% by 2010.
A number of conditions or essential requirements will need to be fulfilled to achieve these targets. These include the need for additional infrastructure, implementation of best practice kerbside systems, prompt application of the NEPM and increased recycling particularly from away-from-home locations (pub, clubs etc). All Covenant participants will need to play an active role in achieving the targets. They are not simply industry targets – they apply to all Covenant participants.
The final Ministerial decision on targets will be interesting. Debus and Thwaites have publicly pinned their colours to the 65% mark. Their officials are arguing that the industry range of 60-65% effectively means a target of 60% - not 65% as their Ministers want. The Commonwealth Government approach on the other hand is likely to be more sympathetic to the ranges advocated by industry. The final outcome on targets will be reached by Ministerial consensus.
The Environmental Code of Practice for Packaging
The revision of the code has now been finalised for inclusion in the revised Covenant (Click here to read). Prior to finalisation, some companies had raised concerns about issues such as listing of toxic materials, matters of packaging degradability and complaints procedures. These concerns were satisfactorily resolved.
The revised Code should now provide companies with a more useful tool for their packaging decision making processors.
The Small Business Exemption
In the first Covenant, Ministers decided that the regulatory safety net (NEPM) which applies to brandowners would not apply to those "that did not make a significant contribution to the waste stream". The original small business exemption was based on a 1% market share threshold. The problem was that this measure lacked clarity and was difficult to verify.
The proposed new small business exemption has three elements:
- If a brand owner has a turnover of greater than $5 million they will be subject to the NEPM (unless they become a signatory to the Covenant).
- If a brand owner has a turnover of less than $2 million they will not be subject to the NEPM.
- If a brand owner has a turnover of between $2-5 million they will be considered for NEPM application if, inter alia, they contribute 25 tonnes of packaging to the waste stream.
The Outlook
If the new Covenant gets the "go ahead" by Ministers on July 1 – and we think such an outcome is likely – work will need to commence promptly on implementation aspects.
Existing signatories will formally need to renew their commitment to the new Covenant. An early landmark for the new Covenant may well be the need for action by governments in implementing the NEPM on those brand owners who don't sign. Indeed this could be a key early crucial test for the effectiveness of the new Covenant arrangements. |
fter a successful promotional period navigating the 2005 Australian Packaging Awards throughout Australia, the closing date for entries is upon us.
