Estimated costs for NSW CDS revealed

18 August, 2017 by Ayoung

Return and Earn has published the estimated fees to be levied to beverage suppliers to fund the NSW Container Deposit Scheme.

The first invoices for the scheme will be issued to beverage suppliers on 1 November to help establish cashflow for the scheme in preparation for it beginning on 1 December.

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Speaking today about the estimated costs for suppliers, Jeff Maguire, Exchange for Change’s (EFC) Project Director, said: “EFC, as an organisation looks forward to supporting recycling initiatives in New South Wales and what we are really looking forward to is delivering a well-run and cost-effective scheme for New South Wales.

“It remains our priority as an organisation to keep the costs as low as possible for both suppliers and ultimately consumers.

“We have now issued the estimated fees to beverage suppliers, we need to stress that this guidance provides information per material type, along with the pricing methodology that we have adopted to establish that pricing.”

In summary, the total estimated range of fees for the first three months will start at 13.54c and go down to 10.94c for aluminium, 14.07c and go down to 11.36c for glass, and 13.78c and go down to 11.13c for PET. This includes the 10c refund for consumers, but does not include GST.

This costing estimate would see $3.38 added to the cost of a 24-pack of bottled beer for the first month of the scheme. This is estimated to drop to $2.84 in the third month of the scheme, although Maguire emphasised these are estimated costs which are based on assumed recovery rates per material type.

“The costs per container are calculated based on a number of variables to ensure they reflect actual redemption rates over time,” Maguire said.

“It is a matter of trying to strike the balance between making sure there are enough funds to pay consumers’ 10c deposit per container and also ensuring the scheme reflects the lowest costs possible for both suppliers and consumers.

“The first three months of fees are estimated, with subsequent invoicing periods to reflect actual redemption rates. As this is a new system and the database for returns needs to be established, the initial three months’ fees will be based on the past twelve months of containers produced, by market share, and an estimate of the initial return rate.”

Maguire also explained that suppliers now need to get a supplier agreement in place with Return and Earn by 1 October and those agreements are available on the Return and Earn website. Suppliers and manufacturers must also register all of their eligible containers with the EPA via the portal by 1 November.

While these costs are initially based on estimates and assumed recovery rates, Maguire did say that the scheme will go through a settling period over the next 12 months as the true costs are established. Based on global figures Maguire said he was anticipating an overall redemption rate of around 85 per cent.

“The key factors affecting the fees are the numbers of containers returned (redemption rates), the type of material returned and the method by which they are collected – either via consumer collection points or traditional kerbside rubbish collection,” he said.

Full details of the estimated costs per supplied container are below and suppliers can find out more information regarding their responsibilities over the coming weeks via the Return and Earn website.

 

Scheme Costs 1st Invoice 2nd Invoice 3rd Invoice
Dates
Scheme Month Dec-17 Jan-18 Feb-18
Invoice Date 1-Nov-17 1-Dec-17 1-Jan-18
Assumptions
Assumed Seasonality Index (100 = Average) 133 119 100
Assumed Recovery Rate per material type 100% 90% 80%
Assumed % of containers recovered via MRFs/kerbside 50% 50% 50%
Assumed containers recovered in month (m) 389 312 232
Calculations
Estimated total scheme costs for month ($m) $53m $43m $32m
Estimated scheme Costs per Supplied Container
Aluminium 13.54c 12.24c 10.94c
Glass 14.07c 12.72c 11.36c
HDPE 13.78c 12.45c 11.13c
PET 13.78c 12.45c 11.13c
Liquid Paper Board 14.42c 13.03c 11.64c
Steel 14.07c 12.72c 11.36c
Other Plastics 13.78c 12.45c 11.13c
Other Materials 13.78c 12.45c 11.13c