Background
Market based instruments can be levies at the tip site to discourage landfilling by making recycling comparatively cheaper; advance disposal fees (ADFs) to help establish a financial incentive for a collection system for the product at the end of its life; and taxes on virgin or toxic inputs, so that more environmentally friendly materials are cheaper.  Several states have landfill levies and a number of products (eg beverage containers in South Australia, motor oil) have an ADF.  These are being explored for more products such as tyres, computers and mobile phones.

The Debate
Industry has resisted MBIs when they are regulated and preferred a voluntary system.  However, the failure to significantly raise recovery of materials is concerning the community and regulators.  Local councils say that they and ratepayers are being burdended with the collection costs through their support for the kerbside recovery system and producers are getting a free ride.  The threat of regulation, from NSW and Victoria is forcing industry to develop collection schemes - this may result in a co-regulatory agreement or if the plan is unsatisfactory direct government regulation by imposing an ADF.  A key concern is to ensure complete coverage of the product sector so that no company is able to get an unfair competetive advantage.  Unlike taxes, levies are not now controversial and the recent steep hike announced in 2005 in NSW was welcomed by the waste management sector.    
 

TEC Position
TEC is undertaking a research and consultation plan on MBIs.  A major report and workshop have been held.  During 2006 national consultations will continue.   TEC has supported MBIs that have a clear impact and are backed up by regulation so there is a level playing field.  Taxes should also be considered as the Australian GST system allows environmentally damaging materials to out compete better alternatives.  
Market Based Instruments and Sustainable Resource Recovery Report [PDF 838kb]