The re-fundamentals of ‘Return and Earn’ – What you need to know about NSW’s new container deposit scheme

The New South Wales Government will roll out a container deposit scheme ‘Return and Earn’ from 1 December 2017.

The scheme is established by the Waste Avoidance and Resource Recovery Amendment (Container Deposit Scheme) Act 2016 (NSW) and the Waste Avoidance and Resource Recovery (Container Deposit Scheme) Regulation 2017 (NSW).

The scheme provides for the payment of refund amounts (set at 10c per container) to people depositing eligible beverage containers at collection points.  It establishes a cost recovery scheme under which beverage suppliers agree to make contributions towards the cost of paying those refund amounts and it prohibits the supply of beverages that are subject to the scheme unless the suppliers have agreed to make those contributions.

The scheme also allows for material recovery facility (MRF) operators to be able to claim refund amounts on eligible containers.  MRF operators will be able to make use of EPA issued methodology to determine an estimate of the number of eligible containers passing through the facility and being recycled and then claim the refund on these containers.

What do local Councils and MRF operators need to know?

The scheme allows local councils to share the benefits of processing claims made by MRF operators.   Under Local Government Act 1993 (NSW) requirements, this will ultimately be passed back to residents in the form of reduced service charges or increased services.

The first 12 months of the scheme is a transitional period, under which the MRF operators are entitled to the total benefit of claims made.  After 1 December 2018, MRF operators cannot receive a processing refund unless:

  • the parties have entered into a refund sharing agreement and the Council has notified the EPA in writing that it considers that agreement to be fair and reasonable; or
  • if there is no agreement, Council has notified the EPA in writing that the fact there is no agreement is fair and reasonable.

Note that the above protections only apply to the situation where Council and MRF operators have existing processing agreements in place, or enter into a new processing agreement prior to 1 December 2017.  Any processing agreements entered into after 1 December 2017 will need to factor in a refund sharing arrangement into the rates payable by Council or separately agree an amount to be set off.

How to negotiate a refund sharing agreement?

In order to arrive at a fair and reasonable refund sharing agreement, the parties will need to consider a range of issues, including:

  • the effect of the scheme on the existing kerbside collection system and payment under the existing processing agreement. This will depend in part on the number of collection points in an area – a decision that is still being finalised by the “Network Operator” under the scheme, TOMRA Cleanaway;
  • the cost of compliance with the scheme on the MRF operator; and
  • an appropriate profit margin to incentivise the MRF operator to make claims under the scheme.

The EPA have indicated they will be rolling out a pilot program over the coming months that will provide information parties can use to help with calculating a refund share.

We are assisting a number of local councils in negotiating these agreements.  Please contact us if we can assist you to navigate these issues.

This post was prepared by Prue Burns with the assistance of Sarah De Ceglie.

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