Ministerial Brief

Attention:      

THE Hon Dr David Kemp, Minister for the   Environment and Heritage

Date:      

11/6/02

Topic:

Plastic Bag Levy

The manufacture and disposal of plastic shopping bags cause significant environmental problems. A 10c levy on bags imposed at point of sale in supermarkets is an efficient and effective way to reduce bags used, and consequent environmental problems. Revenue raised would be used on environmental projects, and to offset compliance costs.

1.  Background

1.1  Australian consumers use over six billion disposable plastic bags every year from supermarkets. As only 0.5% of these bags are recycled, plastic bags take up significant space in landfill, pollute land areas and end up in waterways. There are over 46,000 pieces of plastic floating in every square kilometre of ocean, and over a billion seabirds and mammals die annually from ingestion of plastic. The manufacture of plastic bags also contributes to Australia’s carbon dioxide emissions. The ‘free’ shopping bag consumers’ use at checkouts are clearly not free, as they impose a great cost on the environment.

1.2  The concept of a ‘levy’ on plastic bags is not new. A number of countries such as Denmark, Italy, Sweden, Ireland and Japan have implemented various forms of charges on plastic bags. Ireland (population 3.8 million) introduced a 15c ‘plastax’ in March 2002, to reduce the one billion bags used annually, to a very receptive public. This initiative is expected to reduce carbon dioxide (CO2) emissions by over 15,000 tonnes.

2.     Recommendations

It is recommended that the federal government introduce a plastic bag levy to reduce consumption of plastic bags, and hence reduce the pollution they cause and the quantity of CO2 emitted during production.

2.1 Amount: 10c per bag. This is enough to make consumers aware of the financial cost of using disposable bags, but still not prohibitive for those who choose not to take bags, or forget to bring bags.

2.2 Logistics: The levy would be charged at the point of sale in supermarkets. This could be done with no change to the current cash-register set-up; bags used could simply be added to the bill and itemised on the receipts. This would keep compliance costs down for supermarkets.

2.3 Exemptions: Bags designated as ‘re-usable’ (for example, bags sold for 70c or more) would be exempt from the levy. Small bags used for loose fruit and vegetables, and bags used for fresh meat, fish and poultry would be exempt.

2.4 Use of Money Raised: The revenue from the levy should be specifically hypothecated into a fund for use on environmental projects (along the lines of the Natural Heritage Trust). A portion of the money could also be used to offset any compliance costs for supermarkets.

2.5 Advertising: It is recommended that the Federal government conduct an awareness campaign coinciding with levy implementation, clearly informing consumers about the purposes of the levy, ways to avoid paying the charge, and how the government will use the funds. This could be done through television, billboard, radio, newspaper etc. An informed public are important to ensure popular support of this proposal.

3.  Beneficiaries

3.1 The Australian and international environment; through less bag pollution, less space taken up by bags in landfill, fewer bags clogging waterways and harming sea life, and lower greenhouse gas emissions. Extrapolating from Irish estimates, Australia could reduce CO2 emissions by over 80,000 tonnes. Australia’s natural heritage would also benefit, as funds raised from the revenue would be devoted to environmental projects.

3.2 Supermarkets. Savings from the reduction in bags they need to purchase are significant, as each bag costs between 2-3c for the Supermarket. Compliance costs are minimal.

3.3 The Australian government. Reducing greenhouse gas emissions are part of Australia’s international obligations. A bag levy would also be keeping up with international environmental best practice.

4.  Negatives

4.1 Reduction of domestic production of disposable plastic bags. However, other business opportunity exists, such as the manufacture of sturdy plastic bags that can be purchased by consumers for re-use. However, this will not account for all bag manufacturers, and employment reduction in this industry is foreseeable. Hence the plastics manufacturing industry are likely to be the man opponents to the levy.

4.2 Some consumers may object to having to pay for something that was previously free, or object to the inconvenience of having to bring their own bags to avoid the levy.

4.3 This levy has a slightly regressive effect in that it hurts the poor more than the rich, as 10c is a smaller amount proportional to a lower income. However, because the levy can be avoided by re-using other bags, it can be avoided with a little foresight. The regressive nature of this levy is not a significant barrier to its implementation

5.  Further investigations

5.1  The legal mechanisms through which this levy can be implemented need to be explored further, including the Corporations Law, and Trade Practices Act. Negotiations may need to involve State governments.

5.2 There should be continual monitoring and analysis of the effects of the Irish ‘plastax’, and other international examples to build on international best practice models.

6. Conclusion

6.1 A 10c levy should be imposed on disposable plastic shopping bags at point of sale in supermarkets, accompanied by an extensive government funded advertising campaign aimed at garnering full public support.

7.  Further information

BBC Online, 4th March, 2002, ‘Shoppers Face Plastic Bag Tax’. Available online at: http://news.bbc.co.uk/hi/english/world /europe/newsid_1853000/1853305.stm

Minty, R, 2000. Plastic Unfantastic, Report to Sen. Robert Hill for the 2000 National Youth Roundtable.  Available online at http://www.thesource.gov.au/youth_roundtable/default.htm

Asahi Newspaper, 20th March, 2002. ‘EDITORIAL: Suginami’s shopping bag tax should help it build an image’. Available Online at http://www/asahi.com/english/op-ed/K2002032100179.html

Simmons, C., It’s in the Bag Report, March 2002., The Future Centre. Available Online at http://www.bestfootforward.com