Issue No.06 MANDATORY DEPOSITS KEY POINTS: The argument for mandatory deposits (or more generally 'container deposit legislation') continues to be put forward as the panacea to 'solve the environmental ills created by packaging'. Such a system, applied to beverage containers, means the consumer pays a deposit on top of the purchase price which is refunded on return of the container to a specific location. Mandatory deposits are cited as the means to reduce litter; to encourage recycling; or through the use of refillable containers, to conserve energy and raw materials usage and reduce waste going to landfill. The rationale that consumers will return their containers rather than forfeit their deposits and thus bring about these outcomes has superficial validity. The outcomes are seen as desirable and therefore the position has popular appeal. The detailed evidence from those areas where mandatory deposits are in force show that the arguments are fallacious and little, if any, environment benefit has been gained. In addition, evidence and a number of well researched government and privately commissioned inquiries have shown that the economic impact of deposit legislation far outweighs any gains, and that mandatory deposits would not resolve the environment issues. The Beverage Container Act has been in operation in South Australia since 1977. It applies only to carbonated beverages (beer and soft drinks and their packaging), not to wines, milks, juices. After 16 years even those containers attracting deposits are as prevalent in South Australian litter as they are in the other (non deposit) states. Moreover, the litter problem has not abated. Deposits and Litter The only way to reduce litter is to have a total litter abatement programme (outlined in PCA Issues Paper No. 5: Litter). Washington State, USA, introduced such a program in about 1972. The program aimed to prevent litter through a systematic educational program which highlighted the sources of litter and the ways in which it is spread. Emphasis was also placed on efficient regular waste disposal and street cleaning services. It was funded by a levy on producers and retailers of a wide range of consumer products. The results compared with those in Oregon, USA, following the introduction of a bottle bill in 1972 which affected beer and soft drink containers, showed that positive litter control programmes have superior results over mandatory deposit systems and ones which apply to all litter. Deposits and Recycling Victoria and New South Wales have the most extensive kerbside recycling infrastructure with 60% active community support. No deposits are necessary. Forced recycling, using a deposit system, may bring higher rates but also brings costs not associated with voluntary schemes. A deposit system applied to a specific component of waste is insufficiently flexible to handle efficiently changes in supply and demand; most deposits, of necessity, apply only to those containers of high scrap value and may not, therefore, lead to energy conservation. Recycling is but one method to help minimise waste. For best results it needs to be carried out in a 'closed loop system', that is, the product container recovered and recycled as a new identical container. More commonly the product is recovered and recycled where viable markets exist for the processed material as another product. Packaging materials currently collected for recycling in Australia are subject to international commodity trading and prices. The demand for recovered goods is not steady. Forced deposits take no account of the nature of the trade but at the same time incur collection and sorting costs and subsequently price increases. The packaging industry is committed to achieving waste minimisation and recycling rates proposed by the industry, endorsed by the Australian & New Zealand Environment and Conservation Council and incorporated in the Federal Waste Minimisation and Recycling Strategy. With community support they can be achieved without the need for legislation. Deposits and Refillables One of the strongest reasons put forward in favour of a deposit system is that it would encourage retention of the refill-able system and thus lead to savings in raw materials usage, energy conservation and an extension of landfill life. Mandatory deposits do not guarantee refillable systems. Twelve months after the last deposit bill was enacted to save it (New York 1983), the refillable market had disappeared. In South Australia the refillable market has largely been retained. Voluntary deposit systems operate in other Australian states for refillables, although they had generally disappeared from across Australia by 1975. Such a system also works best in a 'closed loop' situation where full and empty containers are easily exchanged, for example, home deliveries. The days of the horse and cart cannot be recalled nor would it be safe to do so. The variety of outlets for distribution of a product and the distances to the filling line count against retention of refillable containers, particularly if the product is on the national or international market. To conserve resources and energy usage, the refillable container must have a high (return) trippage rate; it must also be heavier than the single use container to withstand the rigours of cleaning, refilling, and transportation. Australian and overseas studies clearly indicate that it is doubtful that refillable containers do lead to energy or resource conservation. High return rates are necessary, but using a life cycle assessment approach (see Issues Paper No. 2: Life Cycle Assessment), the resources used to clean and transport the containers (primarily water and fossil fuels) tip the scales against the system. On a grander scale, studies have shown that the total beverage incidence in Australian waste is 8% in domestic waste and 3% in total waste. This is hardly a sufficient percentage to be singled out. Voluntary recycling rates and the 50% reduction target by the year 2000 are relatively painless and simpler ways to achieve this result. The beverage (beer and soft drink) industry is estimated to use 1.5% of Australia's primary energy use in the packaging and distribution of beer and soft drink. This too is insignificant but even so, LCA may reveal that a lighter non-re-fillable package may be more energy efficient than a recyclable package. As a waste minimisation and landfill measure, mandatory deposits do not necessarily bring savings. So long as deposits are redeemed, the container will be recycled. The same containers are readily recycled in other Australian states with forecast rate increases. If, however, the container is not returned for a deposit refund it will end up as landfill material. If the consumer chooses to purchase a different type of container, not covered by deposits, there is no gain made. Economic Consequences of Deposits Unintended consequences of the imposition of a deposit system are significant. It has been demonstrated in South Australia that mandatory deposits lead to a loss of skilled full-time employment. Part-time unskilled job creation occurs but this should be of no satisfaction. Deposits usually lead to changes in the product mix. In-creased costs are felt by beverage and packaging producer, retailer and consumer. This usually leads to a reduction in demand. A diminished market may lead to less choice available to consumers. THE PACKAGING COUNCIL OF AUSTRALIA'S POSITION The Packaging Council opposes mandatory deposits on select sectors of the packaging industry as these are discriminatory. As such, they interfere with the free market, have negative economic repercussions for the package manufacturer, product user, retailer and consumer. Where mandatory deposits have been introduced on environmental grounds, that is, as litter control, energy conservation and waste minimisation measures, results have not shown any significant improvements. The Packaging Council: Believes that the number of Australian studies on the economic and environmental impact of mandatory deposits on beverage containers show that the cost of implementation outweigh any benefits to be gained. Opposes a piecemeal approach to waste management. Such an approach will not provide a balanced integrated solution and may have unintended negative consequences. Supports total litter abatement programs involving public education, efficient collection systems and equipment and adequate resources for enforcement. Favours recycling where this is economically viable and where it is shown that there are real savings in energy, or raw materials used (see Issues Paper No. 1: Recycling). Endorses the increasing introduction by local government of user pays systems related to waste generated by the householder. Such a system provides incentives for the community to be active participants in recycling, and to reduce all waste, without undue interference by government in the market place. Believes that any long term, effective, solution to the management of waste will require an integrated and balanced approach, which selectively uses all the options available: source reduction; re-use; recycling; waste-to-energy combustion; composting and landfilling. Voluntary industry co-operation is required, necessary and feasible to achieve effective waste management. Read other Issues Papers: No.01 - "Combustion with Energy Recovery" No.02 - "Life Cycle Analysis" No.03 - "Managing Packaging Waste in Europe - Lessons for Australia" No.04 - "Waste Management " No.05 - "Litter" No.07 - "Excessive Packaging" No.08 - "Recycling" No.09 - "Australian Packaging - How Competitive?" No.10 - "The Packaging Council of Australia" No.11 - "Mandatory Minimum Recycled Content" No.12 - "Eco-Labelling" No.13 - "Packaging - Ten Trends for The Next Ten Years" No.14 - "Packaging - It's Essential Role" No.15 - "The Internet - What it Means for Australian Packaging" No.16 - "Single, Active, Post-Materialistic, and Grey?" No.17 - "Digitisation in Printing - Implications for Packaging" No.18 - "Australian Packaging: Issues and Trends"