Australian soft plastics recycling companies are warning that the industry is at a breaking point because too much waste is being sent overseas, pushing up the price locally.

A ban on exporting recyclable waste came into effect from 2021, but the government granted dozens of exemptions to give the recycling industry time to build up capacity.

Now the soft plastics industry says too much product is being exported, both through those legal exemptions and through potential criminal operators selling waste offshore at a higher rate than it can attract in Australia.

The ABC can reveal the federal government has written to the recycling industry, confirming the export exemptions will be wound back, but operators want more to be done to keep plastic waste in Australia.

Piles of plastic ‘not enough’

Australian Soft Plastics Recycling processes packaging from supermarket pallets. (ABC News: Tara Whitchurch)

At Australian Soft Plastics Recycling, in Melbourne’s outer south-east, big bales of clear soft plastics line the factory walls, delivered on trucks from industry.

It is the plastic used to wrap pallets of groceries when they arrive to be unpacked onto supermarket shelves, so it’s mostly clean — only about 10 per cent of it can’t be recycled, such as plastic labels.

But it still needs to be sorted, cleaned and sorted again, before it can be melted down and shaped into little pellets, which are sold to make plastic products like insulation, builders’ film or the sound barriers on the side of freeways.

It is a costly business.

Clive Townsend says inconsistent supplies of soft plastics make it difficult to increase local operations. (ABC News: Tara Whitchurch)

The company’s director of growth and partnerships, Clive Townsend, said they were recycling about 350 tonnes of plastic waste a month, but would like to more than double that.

If only they could get their hands on that amount of product.

“We can’t get enough — we’re paying a lot, but it’s just not available,” he said.

Without wanting to go into prices, Mr Townsend said plastic waste had become vastly more expensive over the past few years.

He said availability fluctuated, making it hard to scale up the business.

The company has written to the federal government, warning that without policy change, domestic recyclers may be forced offshore.

“If we don’t have the feedstock, we can’t meet the scale, and currently we’re way under scale,” he said.

“We could only get 200 tonnes for December — we had to put five people off,” he said.

He’s concerned some operators are exporting overseas, where they can recycle it without paying Australian wages and taxes.

Clive Townsend says Australian recyclers cannot source adquate supplies of soft plastics. (ABC News: Tara Whitchurch)

“We’re able to employ, invest and grow that product base so we’re value adding our waste in Australia,” Mr Townsend said.

What about different types of soft plastics?

The factory is full of piles of plastic waste, but the main type is transparent plastic from industry, known as back-of-house plastic. About 90 per cent can be recycled.

Household plastics like the sort collected by the failed REDcycle program typically contain a much higher rate of contamination — about 40 per cent.

The company has to pay for the plastics it cannot recycle to be sent to a landfill.

Household plastics can be contaminated with non-recyclable material, such as product labels.

If more volume came through the factory, Mr Townsend said the company could invest in new technologies to recycle different plastics.

“There’s a lot of investment in removing contaminants and waste attached — labels, adhesive, it’s a tricky end of the business,” he said.

He said the war in Iran showed the need for a local industry.

“That’s provided a real opportunity because it demonstrates the need for sovereign capability.”

‘A fair bit of material is leaving the country illegally’

Australian Council of Recycling chief executive Suzanne Toumbourou said the broader recycling industry was having trouble accessing enough plastic waste to recycle.

She welcomed news the federal government would wind back export exemptions, but said the industry had reported possible illegal exports, especially for companies recycling the back-of-house, cleaner soft plastics.

“They are noticing that a fair bit of material is leaving the country illegally,” she said.

“Illegal exports is a vexed subject for our sector, particularly given so many recyclers have invested deeply in processing in Australia and we have a real lack of confidence that those rules are being enforced.”

Suzanne Toumbourou says Australian recyclers are reporting plastic waste being exported illegally. (ABC News: Greg Bigelow)

When it comes to household soft plastics, Ms Toumbourou said capacity was building locally, since REDcycle collapsed in 2022.

“The issue with soft plastics coming from household material is that we’re not even able to collect it at a sufficient scale,” she said.

In a statement, Federal Environment Minister Murray Watt said household soft plastics recycling was expanding, with Woolworths recently announcing it would increase its in-store collection to about 700 stores.

“This is a strong example of government and industry working together to restore confidence, deliver practical solutions, and build a more sustainable domestic recycling system for the future,” he said.

Government winding back export exemptions

In March, Mr Watt wrote to peak waste and recycling bodies, advising that future exemptions would only be granted in more limited circumstances.

“Australia’s plastic recycling sector is growing, and my focus is on ensuring we have a sustainable industry so that we can continue to manage our waste responsibly in the long term,” he wrote in the letter, seen by the ABC.

He said future exemptions would be granted on a case-by-case basis “with clear consideration of domestic market impacts”.

“Preventing unlawful exports of waste plastics is a priority for the Albanese government,” Mr Watt said.

“Through monitoring, intelligence-sharing and enforcement action when necessary, the Department of Climate Change, Energy (DCCEEW) is actively ensuring compliance.”

Do you know more about this story?

Get in touch with Margaret Paul at Paul.Margaret@abc.net.au.

Murray Watt says the federal government is working with industry to build a sustainable recycling industry. (ABC News: Tara Whitchurch)

Greens call for more recycled content

Greens senator Peter Whish-Wilson said there was a bigger picture in the recycling industry — what he calls “market failure” over decades.

“It’s been cheaper or more profitable to export waste overseas than recycle it domestically, because we haven’t had the capacity, but more importantly, we haven’t had the demand for recycled content in Australia,” he said.

Mr Whish-Wilson said the plastic packaging industry had set voluntary recycled content targets for decades, but renewed calls on the federal government to mandate them.

“Mandating laws that 30 per cent of all plastic packaging in our supermarkets, for example, has to come from recycled Australian content.”

Peter Whish-Wilson is calling for mandated recycled content targets in packaging. (ABC News: Callum Flinn)

The federal government requires the public sector to consider recycled content in procurements.

The Australian Packaging Covenant, a not-for-profit organisation leading the development of recycled packaging, has a target of 70 per cent of plastic packaging being recycled or composted, agreed on with industry and government.

It falls well short of that — as at 2022-23, it was only 19 per cent.

It also falls short of its target of 50 per cent recycled content in packaging, at 44 per cent in 2022-23.