Five key principles for a national CDS

The Australian Beverages Council is urging government to ramp up the harmonisation of Container Deposit Schemes (CDS) as a part of its post-coronavirus recovery blueprint.

The report, compiled by KPMG Australia, details several other proposals including incentivising key groups to meet sustainability goals, increasing recycling infrastructure, reforming the tax system, simplifying the industrial relations system and improving energy policy.

“As the drinks manufacturing and supply industry continues to adapt to the challenges caused by the coronavirus, the industry will continue to be focused on more efficient use of resources through more sustainable practices and by minimising its environmental footprint,” said Geoff Parker, Chief Executive Officer, Australian Beverages Council Limited (ABCL).

“This will be achieved in partnership with governments through targeted action. As a priority, governments must ramp up the harmonisation of CDS and fast-track the development of reprocessing and remanufacturing infrastructure to handle post-consumer beverage containers and other waste here in Australia to close the domestic loop,” Parker added.

Introduction to CDS across most jurisdictions in Australia, providing a 10-cent refund for each empty eligible container deposited at a collection point, has evoked different responses across the industry, said the report. “On one hand, since this additional cost to the manufacturer is reflected in higher retail prices for consumers, it is believed to have a negatively impacted sales volume. On the other hand, businesses have attributed an increased availability of recyclable plastic bottles and recycling of PET and soft plastics, wraps and labels over the past few years to these schemes. Overall, there has been industry support in the form of compliance with the schemes and high redemption rates.”

ABCL believes five key principles could be used to define a nationally harmonised CDS and could guide concerted efforts in achieving one.

Governance: Designed to be not for profit, CDS should be run by the beverage manufacturing industry, which has demonstrated its experience in operations schemes at lowest cost to consumers. Further, it should be under federal level semi-statutory authority; company limited by guarantee. For managing the operation and finances of the schemes, it is most feasible to have a single scheme coordinator, without a network operator level.

Accountability: CDS should have a single reporting standard across all jurisdictions that will enable minimisation of costs to businesses as well as operations. An independent statutory authority must periodically monitor prices, competition and performance.

Elements: Consistency across jurisdictions can help achieve significant cost savings and improve efficiency. It is important to have consistent legislation as well as protocols (export, first supply, contract bottling) across jurisdictions to cut business costs. It is also important to have a common scope for eligible containers, be consistent in the use of terms/definitions and have cross-jurisdictional branding to increase consumer understanding. It is also important to have a common 10-cent refund amount to reduce incentives for cross-border return. Lastly, an invoice in arrears model, avoiding the need for payment adjustments when based on forecast volumes and a common refund mark including New Zealand (a common market), is highly desirable for businesses.

Services: Significant cost efficiencies can be realised by streamlining back-end functions and establishing a single platform and protocols for container registrations, supplier registrations, invoicing and auditing. In addition, having an integrated platform for reporting, IT processes will reduce the administrative burden and time spent by businesses in uploading information across multiple CDS.

Operations: A single container registration point would significantly cut down business costs and avoid duplication of information for each CDS. In addition, streamlined marketing and promotion as well as multiple collection modes (depots, reverse vending machines) will ensure better understanding and increased opportunities for returning eligible containers. In view of the need for improved sorting operations in Australia, tying the 10-cent refund offered to materials recovery facilities (MRFs) to greater sortation investment would make a sizeable contribution in this goal.

Separately, the KPMG report also highlights high and volatile energy costs borne by businesses across the country, which negatively affects the manufacturing sector, reduces the competitiveness of Australian industry and makes sectors particularly vulnerable during times of crisis.

“There is broad recognition by the industry of the government’s efforts to transition towards renewable energy, but there is also a need for increased incentives to adopt sustainable energy and co-generation schemes that focus on reliability and efficiency of energy supply as highlighted in the KPMG report,” Parker said.

The full policy report can be found here.

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