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Australian plastic waste in Malaysia - the next Bloody Business?

The Australian waste and recycling industry is on a Social Licence to Operate collision path reminiscent of the one that shut down the live export industry in 2011.

Over the past couple of weeks, shocking images and stories have emerged of the consequences of the legal and illegal trade of waste plastic into Malaysia – and they are just the tip of the iceberg. Where the images of plastic stockpiles and scorched earth from illegal incineration are shocking, the human health impacts of the neighbouring communities are likely to be catastrophic.

And we are yet to learn about the working conditions. Will it involve slavery? Will it involve children? It’s hard to imagine that the story won’t get worse.

And where will the next set of stories and images come from? Bangladesh? Myanmar? Papau New Guinea? Nauru?

Failure by government and industry stakeholders to take immediate and comprehensive action to address this crisis will have major impacts on all Australians – economically, environmentally and socially.

A carbon copy of the live export industry crisis of 2011

Eight days after Four Corners aired “A Bloody Business”, an exposé into the mistreatment of Australian livestock in eleven Indonesian abattoirs, all live export trade to Indonesia was shut down by the Australian government in response to intense community backlash.

The Australian waste and recycling industry is on a knife’s edge – and it will not require a Four Corners exposé to slice it open. A couple of unsavoury images of unacceptable working conditions captured by a quick click on a phone will be enough to send the industry into a major crisis.

In 2011, the Australian public did not accept the live export industry’s upward turned palms claiming these activities happened in an environment outside of their control. If government and industry think things would be different this time around then they should think again.

For the live export industry, the Indonesian exposure was the first of several, with footage emerging from incidents in Jordan, Egypt, Pakistan and elsewhere over the next few years. These subsequent events may have gone unnoticed if it weren’t for that first exposure that fed the power of activist groups to scrutinise the industry more closely.

The waste and recycling industry is on the verge of similar scrutiny. Or has it already crossed that line?

The consequences for the live export industry, including Australian farmers, were extreme. The consequences from the fallout of the waste and recycling will be broader – because each of us has a rubbish bin!

How did we get here?

In all industries, things must operate at a profit in order for operations to continue – the alternative is to go broke, go out of business and stop offering a service. Sometimes the community can overlook this when it comes to ‘green’ industries, because somehow we have a perception that these things should just happen for the good of the planet. But the recycling industry is mostly an extension of the waste industry, and waste has a tendency to follow the path of least economic resistance.

Most of what goes in our yellow-top bins (comingled recycling) is reprocessed in Australia, particularly those materials that can be done so with a comfortable profit margin. This includes aluminium, high-value plastics like PET (drink bottles) and HDPE (milk bottles) and a large proportion of fibre (paper & cardboard). Beyond that the economics become questionable.

When glass is collected in bottles it has quite a high value, but when it is shattered and crushed it effectively becomes worthless and may even represent a cost.

Other plastics (recycling numbers 3-7) are not routinely reprocessed in Australia, apart from specialist services such as the REDcycle soft plastics program and printer cartridge recycling.

The tendency then is for the sorters of our comingled waste to look to export markets for lower value plastics, fibre and glass. The sorters either sell these mixed residual recyclables to international waste ‘commodity’ traders, pay the traders to take them away or pay for them to be disposed of in Australian landfills - whatever makes most sense economically.

(And yes, of course, some of the materials are dumped illegally, but that is not the focus of this article).

Prior to January 1, 2018, a large proportion of Australia’s low-value mixed recyclables were sent to China for ‘reprocessing’. What actually happened to them no-one really knows because once they were sold they were no longer of interest.

Just like Australian livestock prior to 2011.

Despite China providing Australia and the rest of the world with adequate notification about the impending ban on mixed recyclables, all levels of Australian government seemed to be caught off guard as the new year dawned – creating the widely publicised recycling ‘crisis’.

As the China ban came into play, the recycling industry and commodity traders were faced with two alternatives – look for better solutions onshore or find another overseas dumping ground.

Whose problem is it anyway?

The active management (collection and some sorting) of recyclables rests primarily with local government. Collection of residential yellow top bins is usually carried out by private waste contractors, employed by councils and paid for by ratepayers. Recyclables from commercial premises are collected directly by the same private waste contractors through a direct transaction.

The waste contractors take the bin contents to private or council-run sorting centres (material recovery facilities), which can be stand-alone facilities or co-located at landfills.

The regulation of these waste destinations, along with the management of more hazardous waste streams is the responsibility of state governments, usually managed by the state Environmental Protection Agency or similar pseudonym.

Consequently, the federal government has no official obligations or accountabilities. However if (when) the situation in Malaysia is exposed to be worse than it is, or human rights atrocities are revealed in another developing country, it is the federal government that will bear the outrage of the Australian and international community.

Industry associations from the waste, recycling and packaging sectors have been lobbying the federal government to provide a meaningful national framework to improve the management of recyclables within Australia but, apart from some fluffy target-setting, the principal response has been to deflect the issue to the states and councils.

To their credit, most state governments have responded through grant programs to encourage local reprocessing capability, but without a national framework and a holistic, life-cycle approach this risks a piecemeal approach that is reactive, inefficient and lacking a cohesive strategy.

So, what’s the solution?

The reaction of the live export industry to its social licence challenge in 2011 was to extend its supply chain responsibility to cover the welfare of Australian animals to the point of slaughter, wherever that was. In simplistic terms, this meant ensuring animals sent to overseas destinations were treated in the same way as they were in Australia. This was a practical solution because live export is a billion dollar industry.

The economics of the residual recyclables trade are not in this league so an extended supply chain responsibility option is not economically feasible – it would be much, much cheaper to just throw these materials in an Australian landfill.  But this option also doesn’t meet the expectations of the Australian community who love to recycle.

This leaves little choice but for Australia to look at on-shore solutions more seriously.

All the pieces are already there, it’s just the coordinated approach that’s missing.

Take plastic as an example. Despite its bad public image, plastic is not inherently evil – it’s the way we handle it after its first use that’s the problem.

Within Australia there are numerous technologies available to reprocess plastics to eliminate the single-use problem. Some of these technologies require a high level of sortation, to ensure a homogenous feedstock - these technologies produce relatively high-grade, high-value outputs. Other technologies are capable of accepting a broad range of plastics as inputs – these tend to produce more industrial, lower value outputs.

In both cases, however, it is difficult for emergent technologies to manufacture products at a price competitive with mass-produced alternatives made from mass-produced virgin plastic pellets in overseas factories.

The missing link is creating higher demand for these products and supporting the transition of these technologies to large-scale commercial operations that can realise efficiencies through better economies of scale. While state governments are making some efforts on this front, the federal government has the opportunity to show leadership by developing a cohesive, holistic framework that takes a life cycle approach and funnels money from those who introduce plastic into the marketplace to those who take it out of the marketplace.

A proactive approach to this challenge would show leadership. Waiting for a social licence disaster to emerge in Malaysia or elsewhere will deepen the Australian recycling ‘crisis’ and force the federal governments hand to take costly rear-guard action within a hostile environment of public outrage.

Or, more likely, force the hand of its successor.

Brendan Lee is the National Strategy Manager for Closed Loop Environmental Solutions, and occasional consultant for Social Licence to Operate consulting firm, Futureye.