(Bill Second Reading, Legislative Assembly, NSW Parliament)

The Protection of the Environment Operations Amendment (Illegal Waste Disposal) Bill 2013 aims to reduce the illegal dumping of waste and includes welcome increases in penalties for illegal waste disposal and new powers for the Environment Protection Authority. However, I am concerned that changes to how the waste levy is collected will undermine recycling and other alternatives to landfill. Currently drop-off centres and facilities that collect recycling and compost and treat waste are exempt from paying the waste levy—it is imposed only on waste that is deposited at landfill sites. Under the bill, the levy is extended to goods presented for recycling and is later refunded. The waste levy is the primary instrument used to encourage alternatives to landfill, making them competitive alternatives to sending rubbish to the tip.

The Department of Environment and Heritage website reports significant improvements in New South Wales recycling rates as a result of the waste levy. In fact, 63 per cent of total waste generated in 2010-11 was recycled, which was an increase from 45 per cent in 2002-03. We cannot let this trend slow down because we are generating significantly more waste. We are generating 17.1 million tonnes, which is an increase from 11.8 million tonnes over the same period. Creating additional landfill sites is not the solution. Landfill contaminates the natural environment and the further trucks have to travel to deliver waste the more expensive it is and the more pollution they create. Recycling is a vital factor in addressing this problem.

I understand that by charging recycling businesses a refundable levy the Government intends to address excessive stockpiling of waste intended for recycling at recovery centres and to prevent illegal disposal or fraudulent classification of waste as recycling. If some operators are avoiding the levy illegally then I share the Government's concern, and that must be addressed. However, while the levy will be reimbursed after material has been processed and returned to manufacture or to other productive use, recycling businesses will still incur significant and onerous administrative costs. Most existing contracts for recycling and waste processing are based on exemptions to the levy, and variations to these contracts would need to be negotiated. Extra costs would also be incurred for administrative compliance such as purchasing new equipment, increased working capital requirements to cover paying the levy and having it reimbursed, and through increased capital costs due to additional uncertainty that may be priced by banks. That uncertainty is a particular problem because the rebate system will be set out in the regulations, which can easily be changed by governments, and banks will take that into account.

New costs will add to the price of recycling, making it less viable in what is a very competitive and cost-sensitive sector. The change is not expected to increase the amount of recycling, but it will make it less competitive. There is a real and significant risk that more waste will be diverted to landfill sites. Costs to councils and ratepayers will also increase. Preliminary estimates from the City of Sydney indicate that prior to reimbursement it would need to cover about $4 million, and the commercial building sector within the Sydney local government area would need to cover about $13.5 million. As a result, the cost of recycled goods made in New South Wales will become less competitive with goods made from virgin materials. I do not believe this is the right way to address illegal waste disposal. The Government should instead target compliance by offenders through increased audits.

It is not clear whether the Government has done a regulatory impact statement that shows the expected increase in the cost of landfill alternatives and compared the proposal with alternatives such as audits. I would like the Minister to inform the House whether a regulatory impact statement has been prepared. If so, what were its conclusions? Councils are concerned that this proposal was not canvassed in the recent waste levy review, which meant that they had no opportunity to respond. I also understand that the Waste Contractors and Recyclers Association had no warning, nor did several large waste consultancy companies. Waste is a serious problem and the amount sent to landfill sites and illegally dumped must be cut significantly. Recycling and recovery are essential parts of the solution, and I am concerned that this bill will increase the costs of law-abiding recycling businesses and therefore make their vital operations less viable.