EPA's Container Deposit Scheme - UPDATE

Where are we at?
Since the New South Wales Premier’s announcement in September 2015, the NSW Government has been working towards creating their own, state wide refund Container Deposit Scheme (CDS). The purpose of the CDS is to address litter problems across NSW and to improve recycling.

On 8 May 2016, a challenging commencement date of 1 July 2017 was announced.

On 23 August 2016 the draft Bill (Waste Avoidance and Resource Recovery Amendment (Container Deposit Scheme) Bill 2016 (NSW)) and the CDS Regulatory Framework Discussion Paper was released for a 4-week consultation period. A number of public consultation sessions were held and have now ended.

Public submissions are still being encouraged and will be accepted up until 21 September 2016.

Public Consultation Session

G&B Lawyers attended a recent public consultation session to understand some of the issues that are being grappled with and likely to arise in the future due to this significant change to waste industry.

Following the public consultation session and after reviewing the documents released for public consultation, we have highlighted a number of questions that we have.

Questions

Scheme Coordinator

There is to be a single Scheme Coordinator responsible for the financial management of the CDS and the targets that will be set. The Scheme Coordinator will be appointed by the Minister for the Environment via a competitive selection process. The Scheme Coordinator will be required to enter into a contract with the NSW Government. It appears that the Scheme Coordinator, whilst bound the contract with the NSW Government, will have some power over the operation and the success of the CDS. Anyone or any company could apply to be the Scheme Coordinator, including beverage suppliers and waste operators, perhaps even a Government Department.

Ø  Is the legislation that dictates the contents of the contracts for the Scheme Coordinator tight enough to ensure that the interests of all under the CDS are protected, whilst still providing incentive for person or company to take on the role as Scheme Coordinator?

Network Operators

There may be as many Network Operators as is desired. Network Operators are responsible for the providing the infrastructure and logistics of the collection points and will also enter into a contract with the NSW Government. It is expected that Network Operators will each be required to set up and service a state-wide network of collection points. Further details are to be provided in the Regulation.

Ø  Is the requirement for “state-wide coverage” too high?

Ø  How does a person or company that wants to be a Network Operator buy into the system?

Ø  Do they have to have possession of vacant land or an option to enter into possession of vacant land throughout NSW to be considered as a Network Operator?

Ø  What if there is one company that can meet the requirements of “state wide coverage” that does not enter into agreements with other people or companies to share their collection points, thus rendering the system non-competitive?

Ø  Will the handling fee be high enough to incentivise people or companies to be Network Operators?

Ø  Will the system fail if large entities such as Coles or Woolworths or petrol station chains set up their own, non-legislated, collection points, and transport containers to one or a couple of legislated collection points?

Infrastructure

Collection points are proposed to be by reverse vending machines or a specifically designed facility for the collection and handling of containers. As most people would appreciate, setting up this infrastructure is costly and will require a substantial amount of time. The proposed commencement date for the CDS is July 2017. To install all, or at the least some, collection points throughout NSW, there will be a number of developments requiring consent from the relevant authority.

Ø  Is a regulatory exemption for reverse vending machines appropriate?

Ø  Once chosen, will the chosen Network Operators have enough time to design, construct and open collection points before July 2017?

Ø  Will there be an appropriate transition period to allow the Network Operators to set up the collection points?

Ø  Will any financial assistance be offered to the Network Operator to install the infrastructure?

Contracts

At the commencement of the CDS, there will be a variety of contracts on foot for the collection of waste. These contracts may be in any form such as fixed term or fixed amount of a particular waste stream.  There is the potential for a number of contractual issues to arise if this situation is not considered and addressed.

Ø  Will there be any guidance or regulation in relation to circumstances where the new legislation makes a party to a contract breach an essential term of the contract (for example, where there is no longer enough waste to reach the required contractual amount?

Commencement date

As stated above, the commencement date for the CDS is proposed to be 1 July 2017. At this stage there are a number of unknowns such as the standard government contracts that will be required to be entered into by the successful Scheme Coordinator and Network Operators including what handling fee will be paid to Network Operators.

Ø  Will infrastructure be ready as at 1 July 2017 for the CDS to commence?

Ø  Will labelling from the suppliers be ready for the CDS, particularly when we are unaware of the containers that will be included in the CDS as this stage?

Ø  Would it be more practical for NSW to wait for the Queensland CDS to be more progressed before commencing?

NSW Government Model

The model that has been put forward by the NSW Government seems to pass responsibility for the CDS onto private citizens and companies. The NSW Government will remain in control of the CDS having an overarching ability to control the contracts pertaining to the Scheme Coordinator and Network Operator and the regulation of the system. The logistics, targets, and further finer details in relation to the operation of the CDS will be left to the Scheme Coordinator to determine.

Given the large responsibility and power given to the Scheme Coordinator and the potential flaws in the CDS, it is important to ensure that the system that is set up, will not fail and will be workable for the proposed 20 years.

Ø  Is the NSW Government rushing the deadline to implement the CDS in order to keep an election promise at the expense of implementing and system that is destined to fail?

In our last blog on the CDS were noted that we have very few details on how the CDS will work in practice.

Now, we can report that we have more details, but not nearly enough to say that it will be workable. So, our question still remains – is the NSW government on track to deliver?

G&B Lawyers

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