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Reply to Coke's Defence Blog

Coca Cola has sought to explain its position on Cash for Containers with a blog by the Head of Corporate affairs (see end of this article). 

Some of it is complete nonsense, most of it misleading at best. Below we pick apart some of the claims and the reality.

Claim 1: There is no problem

What Coke says: “Things are moving in the right direction. Under the current industry driven schemes, Australia's packaging recycling rate has increased from 39% in 2003 to 63% in just eight years.”

Reality: Packaging recovery overall has increased largely due to buoyant markets and demand for used cardboard. The recycling rates for beverage containers (Coca Cola’s core business) is still abysmally low in Australian states (around 40%) except for South Australia which recycles over 80% and of course has a Cash for Containers system. We need the other 7-8 billion containers currently littered or landfilled to be diverted and recycled.

Claim 2: Industry leads recycling efforts

Reality: Coca Cola and other beverage producers have a meaningless impact on recycling rates as the collection and processing, of used packaging is undertaken by local councils paid by ratepayers – us! Similarly, it is local councils and not the beverage producers that fund ongoing, day to day, litter collection; and of course it’s the valiant efforts of hundreds of thousands of Australian’s on Clean Up Australia day every year and other similar community efforts.

Claim 3: Coke cares about recycling

What Coke says: “Our engagement on the issue means that we do have views about the best way to achieve improvement and that at times we disagree with some proposed solutions.  But let's be clear we share the same objective of doing more.”

Reality: Coca Cola say they ‘share the objective of doing more’ as long as this does not place an ongoing obligation on them to be engaged in the recovery and recycling of their used containers.

The current National Bin Network is just such an example. Seed funding for initial bins and the ongoing liability for collection, transport and processing allocated to public facility owners or local councils.

A better example of Coca Cola’s engagement in the issue is its recent move to take the NT government to court to try and kill off the NT cash for containers scheme; (at time of publication) refusing to support the NT government call to operate the scheme voluntarily as it gains permanent exemption under the Mutual Recognition Act; and running misleading ad campaigns describing a cash for containers scheme as a ‘tax’.

 Claim 4: Existing kerbside does a good job and a CDS will undermine kerbside

What Coke says: “Today, many Australians use our world-class kerbside recycling scheme: more than 90% of homes have access to recycling and approximately two thirds of cans and bottles are recycled at home. Home recycling isn’t the issue, but bringing in a CDS will place that successful kerbside system in jeopardy by eroding its economic foundation. Removing thousands of tonnes of bottles and cans from kerbside bins would increase the costs to local councils of providing a recycling service to their ratepayers.  This was borne out in a recent study undertaken by the National Packaging Covenant Industry Association.”

Reality: The National Packaging Covenant Industry Association (NPCIA) is chaired by Coca Cola and is no way independent.

In fact every major report for Environment Ministers has demonstrated a net benefit to local councils of a container deposit scheme. Savings on collection and processing, reduced glass and other contamination of the recycling stream and as highlighted to Ministers, councils retaining deposits from the remnant material left in kerbside are all positives for the kerbside and overall waste system. Also the NPCIA report made no definitive finding on council kerbside costs.

Claim 5: Cash for Containers will cost local governments

What Coke says: “According to Visy, Australia’s largest recycling company, the introduction of a CDS is estimated to impose a cost on its customers in Victoria (ie. local councils) of $4-$6 million a year. That’s a significant cost to local government budgets.”

Reality: In fact local government and shires are one of the biggest supporters of Cash for Containers precisely because it will save them money. This of course will save ratepayers money meaning more for important services. A report for the NSW LGSA showed that NSW, councils would save $63m per annum. The Visy quote above is about the cost to Visy, not councils – and not all the full information was brought to bear.

Council collection and processing contracts are usually separate, so while in some rare cases processing makes the council money (as cited above in the case of Victoria) this is invariably offset by the collection contracts and the net costs of kerbside recycling in Australia is somewhere between $400-600M p.a.

Claim 6: Cash for Containers encourages “scavenging” and is a supplement to the welfare system

What Coke says: “A common CDS proposed is a 10 cent refund deposit on eligible recycling containers (usually excludes wine/fresh milk containers >1 litre). Some people argue that it is a supplement to the welfare system by providing income to people who scavenge bottles and cans from bins.  Some say it could help charitable groups with fundraising and provides pocket money for the kids. It promotes more recycling and less litter of bottles and cans and enables a network of drop-off facilities to be established for returning product.”

Reality: Well, some of this is true. Cash for Container schemes are proven to help the community sector. In South Australia for example, a Scouts owned operation turns over $22m every year with profits plowed back into camps, equipment and membership subsidies. It’s a no brainer that people who want to make some money would collect any discarded containers for the deposit, virtually eradicating this consistent litter problem. Before Coke’s court case, kids in the NT were collecting cans and bottles and sending money to an orphanage in Vietnam - not any more.

Claim 7: The problem is that consumers don’t pay 10 cents,

What Coke says: “…as the Northern Territory experience has shown. Under a CDS they pay up to 20 cents more per drink, because the cost of running the extensive infrastructure needs to be paid for and inevitably is passed on to consumers.”

Reality: The Boomerang Alliance undertook analysis of the NT scheme and found that Coca Cola, Lion and Schweppes (the Dirty 3 that also took the NT Government to court) were profiteering from the scheme by overcharging consumers; and running very inefficient operations. You can read this report here.

It also showed that other beverage companies were not price gouging and did not raise their prices above the 10c deposit.

Claim 8: It hasn’t worked in the NT

What Coke says: “It’s worth noting that after 12 months of CDS, Northern Territory recycling rates are well below the Australian average, with only one in every three containers currently being recycled.

Reality: This is completely misleading. NT recycling rates have doubled in the 12months since the scheme began one year ago. This is consistent with rates around the world as new schemes are implemented. The NT scheme was on track to continue to raise recycling rates further and should reach the expected 80% within about 18 months.

Claim 9: It’s expensive

What Coke says: “…it’s not just industry that says a CDS costs money - the Council of Australian Governments found the cost of a national CDS to the economy would be between $1.4 and $1.76 billion.

Reality: Don’t believe the spin that Cash for Containers would “cost” $1.7 billion. This ‘economic impact’ is made up of two figures: the amount of economic activity generated and the value of people’s time to recycle taken over a 20year period. Most of this figure is private sector investment in new recycling depots, processing equipment etc; and the remainder is literally your time to wash bottles and recycle with a monetary value placed against it – and all studies show that consumers are ‘willing’ to support this activity.

If a housing development “cost” $1.7 billion it would be seen as positive economic activity, creating jobs and investment, so it is with the national Cash for Containers proposal

The actual financial impact on producers and passed through to consumers – as a result of the Boomerang Alliance’s model and its handling fee for recycling – is estimated to be zero. This is because the small fee is offset through the application of unredeemed deposits and sale of material.

Claim 10: Cash for Containers will see the cost of living rise for families

What Coke says: “Modeling has shown that a CDS is likely to raise the cost of an average household grocery basket by 1.35% - double government estimates of the inflationary impact of Australia’s carbon price on grocery bills. It is therefore a significant – and permanent – increase in the cost of necessities, coming at a time when many families cannot afford it.”

Reality: This report by ACIL Tasman economists and commissioned by the AFGC was described by a Senate inquiry as “based on poor data and methodology’. It includes absurd assumptions that all product prices would rise by 20cents (they didn’t in the NT); no consumers return their used container for the refund; and applies a ‘handling’ fee of up to 10cents which would make it higher than the most expensive handling fee in the world. It is completely flawed and represents a gross manifestation of the political and public fear campaign Coca Cola and its allies are attempting to wage.

Claim 11: The community doesn’t really want Cash for Containers

What Coke says: “Eighty-seven percent of those surveyed initially supported container deposits, which fell to 75% (still strong) when made aware of cost impacts. However, when offered the alternative of being able to recycle “out and about”, those surveyed eagerly embraced it. Sixty-eight percent supported "out and about" recycling systems, while 26% still preferred a CDS (6% remained unsure).”

Reality: Coca Cola’s community ‘survey’ was an example of push polling as it presented a series of negative images and associations of a CD scheme. Newspoll surveys for the Boomerang Alliance consistently show 80%+ support for a national CD scheme and in South Australia, where the community have day to day experience of the scheme over 30 years, the support is 98% for its existing deposit / refund.

Claim 12: Coca Cola has an alternative

What Coke says: “There are a range of views on the best option – the one we and others in the industry have put forward is a $100 million plan that independent consultants PricewaterhouseCoopers say costs 28 times less than container deposits while delivering similar reductions in litter and increases in recycling rates.”

Reality: Coca Cola would say they have a better way to increase recycling. This is just an excuse for inaction and will not be as effective as a CDL.  For example none of their alternatives would achieve the over 50million containers recycled in the NT in just 12 months.

The current ‘National Bin Network’ proposal from the beverage industry is a specific alternative to a national CDS and is unproven globally. It’s not possible to have enough bins in all the possible places where litter occurs – they will only make a small difference to litter and recycling. In addition, this proposal will add more costs on local councils for collection, transport and processing of these materials. The beverage and packaging industries have delayed, confused and obstructed government action on this problem waste for 30years and the latest proposal is just another attempt to avoid real action.

More recycling bins are not a substitute for a national container deposit scheme.

Coke's blog: You can read it here.