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Product Stewardship Bill 2011

CHAIR —Welcome. The committee has received your submissions, which are numbered six and seven respectively. Do you wish to make any amendments or alterations to your submissions?

Mr Cossey —No.

CHAIR —Would you like to make brief opening statements.

Mr Cossey —Thank you for the opportunity to address the committee with respect to its inquiry into the Product Stewardship Bill 2011. By way of background, CropLife Australia is the peak industry organisation representing the agricultural, chemical and biotechnology sector in Australia. CropLife represents the innovators, developers, manufacturers, formulators and registrants of crop protection and agro-biotechnology products. The plant science industry provides products to protect crops against pests, weeds, diseases, as well as developing crop biotechnologies that are the key to the nation’s agricultural productivity, sustainability and food security. Plant science industry is worth more than $1.5 billion a year to the Australian economy and directly employs thousands of people across the country.

Specific to the issue before the committee, CropLife member companies spend more than $13 million a year on stewardship activities to ensure the safe use of their products on the environment and human health. CropLife ensures the responsible use of these products through its industry code of conduct and has set a benchmark for industry stewardship through programs such as drumMUSTER, ChemClear and Agsafe Accreditation and Training. Our member companies are committed to the lifecycle stewardship of their products and associated container waste. Membership of CropLife Australia requires registrants of agricultural chemical products to meet certain standards with respect to the development, management and stewardship of their products. All members of CropLife Australia must comply with three codes of conduct that define their obligations with respect to the responsible stewardship of their products. These are: one, the international code of conduct on the distribution and use of pesticides, which requires members to take responsibility for chemical products at each stage of the product lifecycle, from innovation and research through to disposal of containers. The second item requires CropLife Australia members to participate in the Agsafe Accreditation and Training, drumMUSTER and ChemClear programs. Third is the Agsafe code of conduct, which outlines member responsibilities with respect to participation in these stewardship schemes. For the committee’s reference, I will table the three documents just referred to.

CropLife Australia works in collaboration with other key stakeholders to administer our stewardship schemes. CropLife, in collaboration with the Animal Health Alliance Australia, the Australian Local Government Association, the National Farmers Federation and the Veterinary Manufacturers and Distributors Association, has established Agstewardship Australia to provide independent funding and strategic management of the and ChemClear schemes. CropLife’s subsidiary organisation, Agsafe, administers the day-to-day operations of the very successful drumMUSTER and ChemClear programs, as well as managing the Agsafe Accreditation and Training scheme.

Our programs are among the most successful stewardship schemes in Australia as well as being among the most successful schemes for the management of product containers globally. Our success over the previous 10 years has proven our capacity as an industry to manage agricultural chemical product wastes. To date, drumMUSTER has collected and recycled over 16 million agricultural chemical product drums. ChemClear has collected and safely disposed of over 250 tonnes, that is, 250,000 litres and kilograms, of unused, unwanted, expired or deregistered agricultural chemical products. If it were not for these programs, this waste would have either been sent to landfill or collected in farm sheds in rural locations around the country, potentially degrading and presenting health and environmental risks to local communities.

We welcome the Product Stewardship Bill and consider that its three approaches, voluntary, co-regulatory and mandatory, are appropriate to deal with some of the variation in product stewardship schemes that may operate in Australia. However, for the legislation to be truly successful, CropLife would suggest a set of improvements that would maximise its benefits while minimising its costs. One of CropLife’s key concerns is the potential overlap in functions between the proposed accreditation of product stewardship arrangements by the minister under the bill and the current authorisations provided by the Australian Competition and Consumer Commission. While not all product stewardship schemes are required to obtain an ACCC authorisation, those that do must demonstrate the outcome of the scheme will be of net benefit to the Australian community and outweigh any anticompetitive impact that may be delivered by imposition of a levy. For CropLife stewardship schemes this includes a consideration of the environmental benefits associated with having a sustainable, efficient and effective mechanism by which to manage the risks associated with agricultural chemical product and container waste. Such duplication would merely add to the regulatory cost associated with the bill and duplicate regulatory functions for no additional benefit to the environment or community protection and in fact undermine the current effectiveness of our schemes. As outlined in our submission, CropLife believes that this issue could be addressed by recognising that there are other mechanisms to regulate product stewardship schemes that achieve substantially the same outcome as proposed under the bill. Avoiding duplication with those other processes would be beneficial.

One of the key potential benefits that the bill could deliver with our suggested amendments for these existing waste recycling programs would be to ensure a level playing field by requiring those manufacturers and registrants of agricultural chemicals that currently do not participate in a stewardship scheme to demonstrate that they are also managing product and container wastes, either through participation in the drumMUSTER or ChemClear programs or an equivalent mechanism. Currently this is not available and a co-regulatory or mandatory approach must be pursued to obtain that benefit with the corresponding increase in costs. Availability of such a mechanism would ensure a level playing field between those who as a matter of course, like CropLife members, act as good corporate citizens and those who seek commercial advantage by avoiding the costs associated with proper product waste management or full product lifecycle costs.

Overall, CropLife welcomes the bill but notes the potential for increasing benefit and minimising costs through some targeted amendments as per our submission. Should they be implemented, they would assist in ensuring the bill effectively and efficiently achieves its stated objectives. CropLife’s longstanding commitment and achievement in this area and the associated success of our programs provides an effective case study of how this can and should be achieved more broadly.

CHAIR —Under your drumMUSTER scheme you said I think 16 million drums have been recovered. Were they recycled or destroyed—what happened to them?

Mr Cossey —They are recycled predominantly and then reused. There is a double benefit of collecting the waste and then minimising the need for further drums.

CHAIR —How many drums are out in the community?

Mr Cossey —That is an interesting question. There are some habits around the country that can see some collected. We have targets; we are seeking to achieve close to 50 per cent at the moment. Ms Gomez, the CEO of AgStewardship, would have some specific data on the success of the program.

Ms Gomez —I also have a statement to make.

CHAIR —How long is your statement?

Ms Gomez —Around five minutes.

CHAIR —There would be no time for questions. Mr Stapley, do you have a statement?

Mr Stapley—No.

CHAIR —I am sorry I did not come to you. Could you go to your statement now then.

Ms Gomez —Thank you. I will keep it brief because, by and large, Mr Cossey has set out our issues with the bill. AgStewardship would like to commend the objects of the bill and the intention of the national waste policy. As Mr Cossey has said, we are one of the leading voluntary stewardship programs. We value that the bill is attempting to foster and maintain this approach in addressing product stewardship issues.

AgStewardship has been operating since April 2009. We were formed to bring a strategic focus to product stewardship. Our organisation’s members include CropLife Australia, the Australian Local Government Association, the Animal Health Alliance, the VMDA and the National Farmers Federation. We represent the supply chain and their commitment to voluntarily addressing stewardship issues. The establishment of AgStewardship demonstrates the industry and supply chain commitment to product stewardship. We welcome a legislative vehicle to foster that.

We also support the three levels, of voluntary through to co-regulatory and mandatory. We see that logically you would progress through. Where voluntary would work best that is there and allowed for. For products of a high-risk nature that require a mandatory approach, the gradation through to that level is appropriate.

I will now go to the success of drumMUSTER and ChemClear. It is a program where we have addressed both ends of the pipe, not only the collection of waste but also avoiding waste. Through the innovation and technology developments of the chemical manufacturers, along with the support of the farmers in returning empty and used drums, over 75 per cent of waste that would have otherwise gone to landfill has been diverted through this program. That is a significant amount, but it would not have happened if we had focused only at one end. A lot of waste management debate and thinking is increasingly focussing on the start of the pipe. That is a main thing for the committee to consider.

Through a voluntary approach, without having regulatory requirements dictating direction, innovation within the industry has been able to flourish and achieve great outcomes. We have collected 16 million drums. We survey every couple of years how we are performing and in 2009 we collected nationally something like 42 per cent by weight of drums that went into the system. I have a report here that I can table for the committee, which summarises those results nationally and by state.

But there are other success factors. There are something like 84 chemical manufacturers involved in the program nationally, and that covers around 90 per cent of sales. So we have very good coverage and support from the manufacturing sector in AgVet chemicals. We have over 700 sites in rural Australia collecting drums. We also have the support of 460-odd councils around rural Australia, with around 3,000 staff supporting and helping with the collections, with farmers bringing them in. Also, 80 community groups have got involved. So our touch is in all parts of rural Australia.

It is not just on farm or in the manufacturing head officers; it is also on farm and in the local communities. ChemClear was mentioned: yes, 250 tonnes of unwanted chemicals have been collected and 98 per cent of those have been reused for fossil fuel replacement. So there has been an equivalent CO2 saving of around 440 tonnes there. So, again, there is that double benefit that we can provide. They are important programs. The agricultural sector is an important sector. Programs like this underpin our reputation overseas for being responsible, clean farmers. So it is important that their success continues.

Getting back to the bill, our main concern is the duplication of regulation. Considerable resources go into obtaining our ACCC authorisation, and that can be triggered on major or minor events. Some years back we wanted to extend the kind of container that we collect and we needed to go back to the ACCC and get a minor variation before we could do that. Under the bill, the possibility is that we will have to do that twice now in order to expand our program and do more out there. So that is not only introducing costs but also introducing operational inefficiency for us and it makes it more difficult for us to operate effectively and efficiently. I think there is a real issue here from an operational perspective to address that duplication. It is as simple as acknowledging that, for some programs, they have to have authorisation under the Competition and Consumer Act. It is a very simple amendment, we feel.

CHAIR —Thanks very much, Ms Gomez. You said that you wanted to table a document. Do you wish to table that now?

Ms Gomez —Yes.

CHAIR —Maybe I can continue. So you are saying that 60 million drums is 50 per cent?

Mr Cossey —On the current rate, as Ms Gomez indicated, we are hitting 75 per cent of containers going out being collected. The double win here is the fact that these containers then go into being reused. So you are reducing the further output. There is no doubt that there are challenges but, on the current rate, it is performing extraordinarily well.

I should indicate that that number is not that we cannot get to the rest; sometimes they are not offered up. What goes out in one year is not naturally going to come back in one year. Occasionally containers are used for other purposes on farms. There is also an inclination by some to be magpies and to collect them in the sheds for a rainy day. But, generally, on the current numbers, it is performing extraordinarily well. We have seen that in the resulting reduction going into landfill and also during operations like Clean Up Australia Day where they are just not coming across these containers.

CHAIR —I am still confused. You indicated 50 per cent and Ms Gomez is saying 75 per cent. I am not sure if the document that was tabled clarifies that issue. If not, can you take on notice the difference and explain that difference to the committee. I do not want you to do it now, because—

Mr Cossey —Certainly. We can give you a summation of all of the components of the collection.

CHAIR —But, if it is 50 per cent, there are still 16 million tonnes of containers, chemicals and whatever still out in the community. Wouldn’t that be right?

Mr Cossey —Not exactly, because you can have some double counting of containers coming back and being reused again. There is no doubt that there is more out there. It is not that they are sitting around in landfills, though; they are normally being collected and held by farmers themselves and then will get caught up in the system at the appropriate time. But there is a challenge to continue to increase that. Just to be clear with regard to the actual drums—and it is the best one to refer to: 16 million actual drums have been collected. Actually, to be correct, it is more than 16½ million.

CHAIR —So you are doing your analysis on a yearly basis of what goes out and what percentage you get back in. What about the last decade or drums?

Mr Cossey —That is what has been collected over the last decade. The industry led the way and started 10 years ago.

CHAIR —You talk about the regulatory impact on your industry. But before an obligation can be imposed through regulation the minister has to be satisfied that the objects of the act are being met that two or more of the products stewardship criteria specified in the act are implemented and, as a matter of government policy, a regulatory impact assessment requirement of proposed regulations would also have to be satisfied. So there are three steps that have to be taken before there is an imposition on a mandatory position on your industry. Do you accept that?

Mr Cossey —I think we need to be here clear. You are talking about a whole-of-industry process there. Our specific point is that at the moment we have an extraordinarily successful scheme operating on a voluntary basis. It is compulsory, obviously for CropLife members because we insist upon them meeting those obligations to become a member of the peak industry organisation. Our argument is that in achieving a whole-of-industry one you would impose a regime of double reporting on those who are already successfully operating to achieve the set—

CHAIR —You made that point, and you are making the point again. The point I am making to you is that there are processes in the bill that say that, before a whole-of-industry mandatory approach can be undertaken, there has to be these checks and balances. What do you say about those checks and balances?

Mr Cossey —Those checks and balances, though, still then require the double reporting of data even before it becomes mandatory. I suppose that is our core point. Overall, we believe the bill is right. Our argument would be if you specifically targeted the checks and balances to acknowledging that, where there is an effective industry scheme operating with, perhaps specifically, the approval of the ACCC, those participating in that program do not have to still continue, even at the—

CHAIR —Isn’t that why the regulatory impact is there?

Mr Cossey —That is right, but the bill will still impose those reporting obligations on those in the industry who are already participating in a successful scheme. It is why we strongly encourage the components of the bill to go through those processes that are not. It is simply about recognising that those who have got an approval under the ACCC are already meeting those obligations. Or it might be that you move them out of the ACCC area. I would just point out that the reason that we have to go through the ACCC process is that we impose a levy across all members to achieve the outcome, and therefore it is on the competitive basis that we go through the process.

I know the point you are making is that there are checks and balances but, as you go through those processes, the bill does not have a provision to differentiate between those companies in an industry that are actively participating in a successful stewardship scheme and those that are free-riding, if you like.

In light of a former question from Senator Fisher, perhaps we might submit to the committee our original submission to the government’s discussion paper on a national waste scheme. Our submission to the committee was specific to where the bill stands now—more as an addendum to our original submission. That may assist.

CHAIR —Sure.

Senator LUDLAM —I am just interested to know what proportion of the industry is not a CropLife member.

Mr Cossey —Now it is down to about 10 per cent of the entire industry are probably not members of CropLife. We have actively sought to have all in the industry participate. On the biotechnology side we have 100 per cent coverage. On the crop protection side, there is about 90 per cent coverage. In some cases that is because those companies cannot yet meet the standards and obligations that we expect. We actively look to assist them meet those standards so that they can join the organisation.

Senator LUDLAM —You addressed very briefly in your submission the issue of free riders, and I am just wondering whether you can spell out for us how you think the bill can help bring into the scheme people who may not be interested in volunteering.

Mr Stapley —One of things that we would really like to see from this bill is the potential to maximise the benefits while minimising the costs. One of the ways that we can see that that could happen is through the provision of a linkage for voluntary schemes to access the mechanism to draw free riders along as well by requiring nonparticipants in schemes like drumMUSTER and ChemClear to match the obligations that our members already meet. That would enable a level playing field across the entire industry.

Mr Cossey —Further to that, it is about recognising that where there is a voluntary scheme that is being participated in by a substantial sector of an industry, the bill might act for those who are not participating by moving it from a voluntary component to a mandatory component while still allowing the successful voluntary scheme to operate and specifically target those in the industry who are not contributing.

Senator LUDLAM —We have spoken mostly about the drums and the packaging, and you have given us a bit of information about that. You also mentioned briefly in your opening statement the chemicals themselves—that some of the stuff that is distributed and then is not used is lying around and you are interested in getting it back. Presumably that is the ChemClear—

Mr Cossey —That is correct.

Senator LUDLAM —What proportion of the unused stuff do you get back and what happens to it when you get it?

Mr Cossey —That is a very difficult question because we cannot just from sales know how much is not actually used on properties. So there is a lot of guesswork there. We believe—from what we have found, generally anecdotally—that we get nearly all of that back because, at some point, farmers do not want it on their property any more. If it is no longer of any use to them, there is a natural incentive for them to return to it. So I think, on best anecdotal evidence, we have a very high success rate in getting most product back.

Senator LUDLAM —What happens to it—

Ms Gomez —It is an interesting example. Our stewardship has been researching this because it is important for us to make sure that ChemClear is operating as best as it can. One of the issues is whether the chemical is actually perceived as unwanted any more. Our farming industry is very industrious and efficient in their use of resources. So when something may be approaching a use-by date, it is whether it is seen that it can be used before that use-by date comes up. The question of how much is out there is as much about a perception of what is a usable and still effective chemical.

We find in our collections that we are continuing to get more but we need to get more regular collections. I think what the committee has to understand is that we are operating in a rural and remote area. We have the tyranny of distance to deal with. We are generally spending high amounts of money on transport on relatively low-value waste goods. So we have got real challenges there in terms of supporting a viable collection service. Dealing with something like chemicals is very expensive. When we do the collections we need to have chemists on site because chemicals are coming in which we cannot identify. So in terms of managing the occupational heath and safety side of things we need to have very rigorous risk management processes in place.

CHAIR —I am afraid that I have to indicate that you are going to have to try to keep your answers brief. Those opening statements were very lengthy and we have run out of time. The coalition have got some questions and I want to extend a bit of time to them. Senator Ludlam, have you just about finished?

Senator LUDLAM —I will make this my last question. Because it is a voluntary scheme it is difficult to identify what is becoming of the materials. Is the levy paying for the destruction of the chemicals that you do get back—or the identification and destruction?

Ms Gomez —Yes, 98 per cent of the chemicals that we collect are used for fossil fuel replacement. The levy is used for the collection, for people to register and for the disposal. So it covers the full cost. If a farmer buys a drumMUSTER participating chemical, they can return their unwanted chemicals to ChemClear free of charge because they have paid upfront through the levy.

Senator LUDLAM —I will put my last question on notice, because I think you took some from the Chair as well. I am interested, as the Chair was, about what proportion of industry coverage and material coverage you think you have.

Senator FISHER —Be that as it may regarding the answer to that line of questioning, congratulations to the industry for both ChemClear and drumMUSTER. In many ways they were both before their time. Your presence here is evidence of that. Getting back unused chemicals and leftover containers must be a bit like herding feral cats. So well done, even though more work needs to be done. Are your two organisations, AgStewardship and CropLife, only about the very important chemicals and pesticides? Is that the stuff which you oversee?

Mr Cossey —Yes, senator, because the industry is led by just the agricultural chemicals.

Senator FISHER —But there are no other products in your bailiwick; it is just chemicals and pesticides?

Ms Gomez —At this stage, from Agstewardship’s perspective, we are focused on making sure that drumMUSTER can clear a setup for success over the next decade. But it is within our strategic remit that we will look at other stewardship opportunities.

Senator FISHER —For other agricultural products?

Ms Gomez —In the agricultural supply-chain sector.

Senator FISHER —Earlier witnesses mentioned ‘low-hanging fruit’. The industry has, in other words, self-selected chemicals and their containers as the low-hanging fruit.

Mr Cossey —From CropLife’s perspective, no. The programs cover all of our members’ products.

Senator FISHER —Understood. I should have directed that to Ms Gomez.

Ms Gomez —I see your point. This was decided based upon the risk and environmental issues that were being addressed. My understanding of ‘low-hanging fruit’ is that it is the quick gain and the easy pick. I would suggest that these two products are not necessarily in that category. The industry went to address a demonstrable environmental risk.

Senator FISHER —Thank you. It is not clear what the fruit is in that context, is it? Do you understand, Ms Gomez, what the effect of this bill will be on the agricultural sector in the broad, leaving aside your CropLife perspective? What products will this bill affect from day one?

Ms Gomez —It can affect a broad variety. The question is—

Senator FISHER —Are the ‘fruit’ defined?

Ms Gomez —Not particularly.

Senator FISHER —No.

Ms Gomez —But I do not think that this has been drafted just for agriculture. This bill is cutting across more than—

Senator FISHER —But you speak on behalf of agriculture, do you not?

Ms Gomez —I do. But I also speak on behalf of a stewardship organisation and the point of this bill—

Senator FISHER —In—

CHAIR —Senator Fisher, if you would allow Ms Gomez to finish her answer that would be handy.

Senator FISHER —Can you explain how?

Ms Gomez —How we represent stewardship?

Senator FISHER —Broader than agriculture. I thought we had you here today on behalf of AgStewardship. I am questioning the basis on which you can speak more broadly.

Ms Gomez —Because one of our capabilities is about being good stewards, I think we have some insight into how a broad stewardship bill may work, through our own experience.

Senator FISHER —Can you confine your answer to AgStewardship. Do you understand what agricultural products and substances this bill would apply to from day one? If so, what are they?

Ms Gomez —It is quite evident what they will be. They will be products that agriculture relies on that have an impact on waste, the environment and occupational health and community health issues. So it is broad; you are quite right.

Senator FISHER —It could be everything, could it not?

Ms Gomez —And if you multiply that across other sectors you will get multiples and multiples. If you are dealing with waste then by its nature it has to deal with a whole lot of different sectors and industries.

Senator FISHER —Ms Gomez, you referred to the pipeline and to the beginning of it and the end of it. How do you know that this bill does not apply to the stuff in between? Returning to chemicals and pesticides, could this bill not be applied, for example, to substances within chemicals or within pesticides during their life and during their use, particularly bearing in mind the product stewardship criteria listed (a) to (f)? I would ask you to take that question on notice. I would ask you to go away and look at it in the context that any two of those criteria from (a) to (f) could be the trigger for the application of mandatory standards. I would ask you to look at it in the context of whether this bill could apply, even in the limited context of chemicals and pesticides, to something other than mopping up that which is left over and collecting the drums.

My final question is to confirm that drumMUSTER and ChemClear were totally voluntary. So 10 years ago, did they start voluntarily?

Mr Cossey —The industry started voluntarily and it was made mandatory to be a member of CropLife, but it is industry led.

Senator FISHER —The success of that could demonstrate a voluntary scheme.

Mr Cossey —We would put it forward, not only nationally but globally, as one of the best stewardship recycling programs there are.

Senator FISHER —Indeed. Well done; thank you.

CHAIR —Thank you for your participation today.

[10.10 am]