The Great Australian Recycling Crisis

September 26, 2019
Editor(s): Laukik Parulkar
Writer(s): Aktsa Efendy, Andrew He, Vincent Lin

Recently, across all media platforms, a debate is burgeoning regarding Australia’s recycling crisis and what resolutions Australia needs to find. What began with China’s ban on the import of foreign waste, soon resulted into other large markets like India following suit. The recyclable waste was then sent to smaller markets in Southeast Asia such as Malaysia, Indonesia, and Vietnam. In the first half of 2018, imports of plastic trash increased by 56% in Indonesia, 100% in Vietnam, and 1370% in Thailand. In May of 2019, Malaysia decided to send around 3000 tons of plastic waste back to source countries like Australia, US, UK, and Canada. Malaysia’s environment minister, Yeo Bee Yin, said that Malaysia had turned into a dumping ground for many developed countries after China’s ban, and that the country will no longer accept unwanted waste. As a result, several containers filled with contaminated waste smuggled to Malaysia were being returned to their country of origin. It is time for Australia to find a way to deal with its recyclable rubbish.

Why did China ban plastic waste imports?

Until 2017, Australia exported around 1.3 million tons of recyclable waste to China because it was easier and more economical to ship waste than to process it at home. The cheap labour and more lenient environmental standards made China an easy choice. The processing of imported waste happened across 30 Chinese towns. The health of the people in these towns, as well as the environment, began to deteriorate over time, and China took notice. China’s president, Xi Jinping, realised the harsh effects of imported plastic waste and decided to resolve the issue as part of an environmental reform movement in his bid to establish China as a global superpower.

 Australia’s recycling industry

Today, Australia does not have the appropriate infrastructure to reuse plastic waste. It did not foresee the waste ban from Asian countries. As a result, all the plastic waste we throw out is now simply piling up in the warehouses and yards of recycling companies spread across the continent. The lack of foresight means we are left in worrying times with no tangible solutions at hand.

The issue is far more complex than just a lack of foresight. There is a lack of funding owing to the fact that recycling prices are near rock-bottom. Thus, efforts in building a robust and sustainable infrastructure for the plastic recycling industry are not able to take off. More concerning, however, is the meagre earnings in the recycling industry; high levels of contamination in co-mingled recycling bins are to be blamed for this. Ernst & Young estimates that Australia could potentially generate $328 million from recycling waste if it treats rubbish the same way as it does iron ore or coal. However, the reality is that the industry earns a measly $4 million annually because we do not treat waste as a tradeable commodity. Currently, Australia’s co-mingled recycling bin adds value only to the tune of $2 a ton, compared to a typical curbside bin. This number can potentially increase to $156 a ton simply by improving our sorting methods.

The Australian recycling industry is severely lagging behind its peers in terms of operating efficiency and profit generation. SKM Recycling, one of the biggest homegrown names in recycling, defaulted on millions of dollars of debt when regulators discontinued some of their processing plants. As a result, Victorian councils have just been sending waste directly to landfills without getting them processed at all (Jacks, 2019). This is utterly unsustainable in the long run.

What is the government doing about it?

Since the collapse of SKM, Victoria’s recycling system is in chaos. Recently, the Andrews government has pledged a $10m loan to SKM to get Victoria’s recycling program back on its feet; however, SKM owes creditors more than $100m. The Morrison Government banned exporting rubbish this year and committed $20m to research on improving the recycling industry (Clay Lucas, 2019b). Instead of taking immediate action, the government wants to turn a blind eye and pretend that the a quick solution isn’t necessary. Some of the local councils suggested introducing up to five bins for recycling. However, a simple visit to Melbourne’s Flinders Street Station will prove that people cannot even differentiate between two bins; let alone four. (Clay Lucas, 2019a)

 What can you do about it?

We have been spoiled by the convenience of shipping our waste to other countries; however, environment conservation is a global issue and we have a shared responsibility towards the planet. The transformation of our own recycling industry will require heavy investment; unfortunately, our government does not have the know how to tackle this issue just yet. Large companies and manufacturers have not been forced to deal with the recycling issue. The disposal of the products that they manufacture are simply the consumers’ responsibility once they are purchased. Ideas have been tossed around to force large companies to commit to a more sustainable path; however, no real progress has been made in this area.

It may seem like there is no light at the end of this tunnel, but we can always improve our habits and bring change at an individual level. If we care to keep Australia clean and contamination-free, we must make an effort to avoid producing excessive rubbish. Here is a list of simple things we can do to make recycling a smaller problem of the future:

  1. Ditch the plastic bag – Coles and Woolworths have certainly helped in pushing this agenda.
  2. Start using reusable containers – Your daily coffee? Perhaps bring your own cup next time.
  3. Start composting
  4. Cancel unnecessary mail
  5. Stop using disposable cups and plates
  6. Stop buying plastic water bottles; they rarely get recycled

Recycling is an issue far too complex to be tackled by just one party. Consumers, companies, and governments need to come together in order to confront this issue more effectively.

References

Clay Lucas, B. P. (2019a, 2019-09-11). Council weighs up fifth bin for recycling, while SKM clean-up continues. Retrieved from https://www.theage.com.au/politics/victoria/council-weighs-up-fifth-bin-for-recycling-while-skm-clean-up-continues-20190911-p52q6j.html

Clay Lucas, B. P. (2019b, 2019-09-03). Tonnes of recycling to landfill despite government $10m rescue package. Retrieved from https://www.theage.com.au/politics/victoria/tonnes-of-recycling-to-landfill-despite-government-10m-rescue-package-20190903-p52nkd.html

Jacks, T. (2019). Warehouse of recyclables ‘a fire hazard’, owner warns.

Recycling bad habits costing Australia $324 million. (2019, 2019-09-11). Retrieved from https://www.afr.com/companies/infrastructure/recycling-bad-habits-costing-australia-324-million-20190910-p52pyz

The CAINZ Digest is published by CAINZ, a student society affiliated with the Faculty of Business at the University of Melbourne. Opinions published are not necessarily those of the publishers, printers or editors. CAINZ, its Partners and the University of Melbourne do not accept any responsibility for the accuracy of information contained in the publication.

Meet our authors:

Laukik Parulkar
Editor

Laukik is a Master of Finance student and a CFA Level 3 candidate. An interest in global economic developments, technological advancements and investment strategies has driven him to pursue a career in asset management. When his head isn’t hidden behind a laptop, he is in the gym doing burpees and mountain climbers!

Aktsa Efendy
Writer

Aktsa Efendy is a Commerce student majoring in Economics specializing in Mathematics at the University of Melbourne. He loves to read, write and occasionally writes think-pieces on his Medium blog (medium.com/@aktsaefendy)

Andrew He
Writer

I am currently a second year student studying Bachelor Of Commerce. I am a digest writer and joined Cainz in 2019. I am interested in table tennis, running, photography and financial markets.

Vincent Lin
Writer