The great packaging war. Who cleans up?
Australia's new packaging bill would make producers pay for the waste they create — but Europe's experience suggests the levy and the outcome aren't the same thing.
Australia throws away an extraordinary amount of packaging. Roughly 5.4 million tonnes of it each year, by the government's own estimates, and a fraction of that makes it back into something useful. The rest goes into landfill, waterways, or the increasingly crowded category of things we know are problems and have not quite managed to solve. The government's answer is the Extended Producer Responsibility Scheme for Packaging, a bill currently working its way through the Senate, which would shift the cost of dealing with packaging waste from councils, taxpayers, and the environment onto the companies that produce the packaging in the first place. The idea is intuitive and the frustration behind it is legitimate. The design is where things get complicated.
EPR's logic is sound; its track record is not
Extended producer responsibility, or EPR, is not a new idea. The EU has operated versions of it for decades, as have Canada, South Korea, and several other jurisdictions. The basic logic is sound: if you make a company responsible for the end-of-life cost of what it sells, it has an incentive to design products that are cheaper to dispose of or recover. Thin plastic films that clog sorting machines become more expensive. Easily recyclable mono-materials become more attractive. The price signal, if it works, reaches back into design decisions rather than sitting entirely at the disposal end.
The problem is the gap between that logic and what actually happens when you legislate it. Producers adapt, but not always in the ways the policy intends. In some European schemes, companies found it cheaper to pay into a compliance fund than to change their packaging, which meant the levy became an operating cost and the packaging barely changed. In others, smaller producers found compliance costs prohibitive and either exited or passed the costs up the chain in ways that reduced competition. The recycling infrastructure the scheme was meant to fund often lagged years behind the obligations it was supposed to support. The mess did not disappear — it just acquired a new billing address.
The mess did not disappear — it just acquired a new billing address.
A levy is only useful if the infrastructure exists to spend it on
This is the structural tension that EPR advocates tend to underplay. Moving financial responsibility does not automatically move capability. Australia's kerbside recycling system is patchy, its soft plastics infrastructure essentially collapsed after REDcycle went under in 2022, and the domestic reprocessing industry is thin. A levy that raises significant money is only useful if there is somewhere capable to spend it. Without that, you are taxing packaging to fund a system that is not yet built, while producers factor the cost into retail prices and consumers foot the bill at the checkout. As we've noted before in relation to similar supply-side interventions, legislating a cost shift is not the same as solving the underlying problem.
The current arrangement is not working either. Councils bear costs they cannot control, landfill volumes keep rising, and voluntary industry targets have consistently underdelivered. The Australasian Recycling Label exists and most people ignore it. When market signals and voluntary commitments fail, the case for a regulatory floor is not ideological, it is practical. The question is not whether to intervene, it is whether this intervention is well-designed enough to produce more benefit than friction.
The Senate hearings exposed a real design dilemma — both sides are right
On that, the Senate committee process has surfaced real disagreements. Industry groups worry about compliance costs for small and medium producers who lack the procurement leverage to shift to alternative materials quickly. Environmental groups argue the thresholds and timelines are too generous, giving large producers room to delay meaningful change. Both concerns can be simultaneously true. A scheme that is too costly too fast kills off smaller players and concentrates the market. A scheme that is too gentle lets large incumbents treat it as a licence fee and change nothing.
The government is threading a needle here, and the thread is not particularly thick. What distinguishes EPR schemes that actually changed packaging from those that just changed invoices is the specificity of material-level targets, the independence of the compliance infrastructure from the industry being regulated, and the credibility of enforcement. Vague targets with self-reported compliance do not move packaging design. Clear targets with third-party verification and meaningful penalties can.
The bill's fate will be decided in the subordinate legislation
Australia's track record on environmental regulatory follow-through, particularly where industry lobbying is vigorous and enforcement resources are limited, is not one that invites uncritical confidence. The policy architecture in the bill is closer to right than wrong. Whether it actually delivers cleaner packaging or simply a cleaner conscience for everyone involved will depend almost entirely on implementation details that are not yet locked in.
That is not a reason to abandon the bill. It is a reason to watch the subordinate legislation very carefully, because that is where the real packaging war will be fought.
Sources
Frequently Asked Questions
What is extended producer responsibility for packaging in Australia?
Extended producer responsibility (EPR) is a policy that makes the companies who produce packaging financially responsible for managing that packaging at the end of its life. Australia's proposed EPR Scheme for Packaging Bill 2026 would shift costs currently borne by councils and taxpayers onto producers, with the aim of creating incentives to redesign packaging for easier recycling.
Will the packaging EPR scheme increase the cost of groceries?
Almost certainly to some degree. Producer levies under EPR schemes move through supply chains and are typically passed on in retail prices. How much depends on scheme design and market competition, but comparable overseas schemes have documented consumer price effects — the question is whether the policy benefits outweigh that cost.
Why haven't voluntary packaging targets worked in Australia?
Voluntary industry targets under frameworks like the Australian Packaging Covenant have consistently fallen short of their goals. Without financial penalties for non-compliance, companies face no binding incentive to meet targets, and the costs of packaging waste continue to fall on councils and the environment rather than producers.
How do you tell if an EPR packaging scheme actually works?
The evidence from European and other schemes points to three factors: specific material-level recycling targets rather than aggregate goals, compliance infrastructure that is independent from the industry being regulated, and credible enforcement with meaningful penalties. Schemes that lack these tend to become a cost of doing business without changing packaging design.
What happened to REDcycle and why does it matter for the new packaging bill?
REDcycle, Australia's main soft plastics drop-off scheme, collapsed in 2022 after it accumulated stockpiles of plastic it had no capacity to process. The failure exposed how voluntary, industry-run recycling schemes can fail at scale, and it left Australia without functioning soft plastics infrastructure — a gap the EPR bill's levy revenue would need to help fill.