Covenant History
Background
In the late 1990’s kerbside recycling was estimated to be collectively costing Australian Local Governments around $100 million pa. The packaging industry was benefiting from community reassurance that packaging waste was being well managed, yet made no substantial contribution to the cost of managing packaging waste. Meanwhile in other jurisdictions, such as Europe and North America, there was growing interest in mechanisms for managing the post-consumer impacts of products with terms such as Extended Producer Responsibility and Product Stewardship gaining currency over this period.
The Covenant
Against the background described above, the National Packaging Covenant was established in 1999 with support from Federal and State Governments and from Industry. The central objective of the Covenant was to establish a shared responsibility framework for managing packaging waste. The Covenant gave emphasis to voluntary participation and autonomous determination of appropriate actions for each of the signatories.
In signing the Covenant, companies and industry associations committed to providing funds of up $17.6 million over the five years of its operation. The state governments committed to match industry contributions dollar for dollar. These funds were earmarked for “studies and other measures aimed at improving the cost-effectiveness of kerbside collection programs, and at strengthening and expanding markets for collected materials” (Department of Environment and Heritage). The Covenant specifically precludes these funds from being spent on subsidising kerbside recycling.
A description of the Covenant can be found on the website of the Department of Environment and Heritage.
Local Government Involvement in the Covenant
The majority of Local Governments and State Associations decided not to sign the Covenant, because it failed to address their key concerns regarding the management of packaging waste. The Local Government Association of Queensland and the Municipal Association of Victoria did sign the Covenant on behalf of their members while a number of individual councils in other jurisdictions also signed. The WA Local Government Association publicly stated its opposition to the Covenant on several occasions.
Achievements of the Covenant
Throughout much of 2003 and 2004, the first Covenant was the subject of a large amount of analysis and review. The results from much of this work is available here. Commonly cited achievements of the Covenant are the large number of voluntary signatories which joined, an increased organisational awareness of packaging issues and a number of successful enterprise based initiatives to reduce packaging.
The Municipal Waste Advisory Council and the WA Local Government Association have repeatedly criticised the Covenant for neglecting to create any new, meaningful responsibilities for the management of packaging. All of the mechanisms of the Covenant relied heavily on the goodwill and conviction of individual signatories. The Covenant defined no clear outcome which all signatories would need to collectively achieve, nor did it prescribe any quantifiable outcomes for signatories to achieve individually. The mid-term review of Covenant action plans showed that only a minority of the companies which signed the Covenant were actually complying with the intent of the Covenant.
The effect of the first Covenant on increasing the recycling of packaging and reducing its resource impact will never be accurately known. This is because no reliable data exists on the national recycling rate before the Covenant and the data about the current recycling rate remains controvertial. In terms of the cost of recycling to Local Government, the latest estimates of costs are much larger than those of the late 1990's. The current estimate of $296 million per annum,
Covenant Mark II
The first Covenant expired in July 2005 and the next iteration - Covenant Mk II - was finalised and signed by Environment Ministers across the country on 1 July 2005. Covenant Mark II has been signed by Ministers on the understanding that the EPHC will continue to investigate complimentary mechanisms in order to ensure that the diversion and recycling targets are met. This contrasts with Covenant Mark I, which effectively froze the development of other State or Federal policy on packaging waste.
The National Packaging Covenant Mk II continues the voluntary approach to engaging industry in packaging management. Like the first Covenant, Mark II will be based on voluntary sign up, non-prescriptive individual actions, financial contribution to a funding pot based on business turnover and a safety net which will apply to companies which do not participate in the Covenant.
The Environment Ministers have also committed to the parallel investigation of alternatives during the first three years of the Covenant Mk II, having recognised the need to have alternative instruments ready to launch in 2008 if the Covenant fails to meet its performance targets. The Local Government Associations from Queensland, Victoria, Tasmania, South Australia and Western Australia all signed the Covenant in 2005, whlie those representing New South Wales and the Northern Territory did not.