The Victorian Government has asked us to provide advice on competition, system-level resilience, service quality and greater transparency in the waste and resource recovery sector.
Waste and resource recovery services review 2019
In August 2019, the Victorian Government asked us to prepare advice on how to address issues of competition, system-level resilience, service quality and greater transparency in the waste and resource recovery sector.
We have provided initial confidential high-level options for the design of a regulatory regime for the waste and recycling sector to address issues of competition, service quality and transparency.
Issues facing the waste and resource recovery sector
The waste and resource recovery sector provide important services for public health and environmental protection, with waste and recycling facilities owned by private operators and local government.
Recent market disruptions have significantly affected many waste services, including Victoria's kerbside recycling system. The significant decline in the value of many recovered materials has reduced processors' revenue and affected the viability of kerbside services under existing price arrangements.
Limited availability of alternative recycling markets, combined with limited capacity of the recycling industry to locally process or safely stockpile recyclables has resulted in further issues, including:
- recyclable materials being sent to landfill
- temporary suspension of kerbside collection in some councils
- increased cost to households
- increased cost to government to clean up stockpiles and contaminated sites.
Later advice to be provided
Following our initial advice, we may be asked to provide advice associated with implementing the government's preferred option.
At this stage we may consider the potential for waste and resource recovery services to be regulated as an essential service to improve efficiency, innovation and long-term viability of the market.
In doing so, we would explore:
- community and business expectations in relation to the quality and reliability of waste and resource recovery services, and the need for providers to comply with environmental and safety regulations
- the structure and contractual arrangements of the supply chain from collection, sorting, storage and processing through to disposal, including allocation of risk across the supply chain
- concentration of the recycling industry and any barriers to market-led investment, incentives for long-term investment, and the financial viability of the sector
- whether there are information asymmetries, market power or other sector attributes undermining the effective operation of a competitive market
- opportunities to improve transparency of cost/price information to councils and communities.
Terms of reference
In August 2019, the Victorian Government provided terms of reference for our review of waste and resource recovery services.