13 Appendix E: Evaluation of different project stewardship alternatives

The scheme is efficient and effective

The "status quo" is not efficient or effective in diverting tyres from landfills to reuse options. An expanded TyreTrack scheme supported by regulatory intervention and financial contributions could be designed to be both efficient and effective. The "leave it completely to the private sector" option could be effective for a proportion of the market in large metropolitan areas.

Contains publicly reported, challenging, performance measures, quantifiable where possible

The status quo TyreTrack system provides reported information. The expanded scheme could be designed to provide publicly reported information and performance measures. Any arrangement between two or more different private sector organisations would not achieve this objective.

Transparency

The status quo is transparent and any expanded scheme could be designed to achieve this objective. Any arrangement between two or more private sector organisations would not achieve this objective.

Encourages market competition

The status quo encourages competition amongst registered users, as would both an expanded scheme and private sector-only arrangements.

Sets safe standards for collecting and handling

The status quo does not include safe handling but an expanded scheme could. Private sector arrangements would not necessarily address safety considerations.

Forum for communication and industry wide participation

An expanded scheme would provide significantly greater communication and participation than currently exists. The private sector arrangements would not achieve this.

Includes public information and education

An expanded scheme would provide significantly greater education opportunities than currently exists. The private sector arrangements would not achieve this.

Includes provision for monitoring and reporting on effectiveness

An expanded scheme would provide a broader network for monitoring, as compared to the status quo which only covers 30% of the market. Private sector arrangements would not include provision for monitoring.

Compares favourably with international best practice

An expanded scheme could be designed on a par with international best practice, as the status quo has a highly restricted scope. Private sector arrangements in themselves may be examples of best practice, but research on overseas practices indicates that there is an umbrella product stewardship scheme in place as well.

Is compliant with international trade agreements

The expanded scheme would need to be compliant with international trade agreements, in particular the World Trade Organisation "Technical Barriers to Trade". The status quo is, and private sector arrangements would be, fully compliant.

Cost of enforcement and management of free riders

One of the key objectives of the expanded scheme would be to manage free riders. The status quo does not achieve this and the issue would not be relevant to private sector arrangements.

Internalise waste management costs

The expanded scheme could be designed to internalise waste management costs and simultaneously assign waste disposal costs to landfill operations. The status quo does not achieve this. Depending on the private sector arrangement, it may internalise waste management costs.

Environmental outcomes

The status quo does not achieve any environmental outcomes apart from potentially preventing some illegal tyre dumping for 30% of the sector (though this analysis is countered by the observation that it is largely the responsible retailers and collectors which will be signed up to the scheme - the illegal dumpers will likely just be continuing existing practices).

The expanded scheme would be designed to reduce illegal dumping and landfill disposal. This would have significant environmental and social benefits including improving landfill leachate, using less space, minimising risk of fires and unfair allocation of costs for disposal following illegal dumping. Additionally the expanded scheme would increase recovery of materials and energy.

Private sector arrangements also have the potential to significantly improve environmental outcomes through resource efficiency gains and diversion of a problem waste product from our landfills.

Social outcomes

There are some community benefits arising from the status quo, which could be increased through the expanded scheme. An example could be providing local entrepreneurs with an easier way to source tyres to run their programmes (eg, community gardens or playgrounds).

Tyre retailing is a significant industry creating a large number of jobs. The status quo improves the levels of understanding and communication in the industry, encouraging industry development, and this would be built upon in an expanded scheme.

Due to the low prices of the raw materials the business opportunities in the tyre end-use are low. The status quo supports those opportunities by reducing the costs of information search, and this advantage would increase through the expanded system. (Note that this analysis is completely dependent on the end-use.)

To a lesser extent a private sector arrangement would contribute to these social gains.

Note that the environmental and social impacts arising from the current disposal (which could be addressed with the expanded scheme and to a lesser extent with private sector arrangements) are fully addressed in Section 3. Also note that this evaluation does not cover raw material use in the production of tyres (crude oil) and its impact on oil mining areas as well as contribution to climate change and resulting ecosystem effects. This study considers the wasting of the resource value of tyres at the end of their life. The status quo, expanded scheme or private sector arrangement do not affect the take up of new tyres which is driven by a requirement to have tyres fitted to vehicles that are legal.

Stakeholder opportunities and risks

The status quo improves the reputation of the industry by informing the public about the recycling scheme. The interviewed stakeholders felt there was a need for educating both the public and the industry about the scale of the environmental impact caused by EoL tyres in order to encourage wider participation and limit the number of customers avoiding payment of the disposal fee.

The scheme improves market competitiveness by providing better information for the market players. Participation in the scheme results in increased administration cost related to the management of tyres, which gives an advantage to the free riders. Some retailers don't inform the customers about the disposal fee and activities because they are worried that customers will assume a higher price and shop elsewhere.

The scheme offers a level of business support by providing a forum for exchange of knowledge and a reliable source of information.

All of these benefits would be enhanced through an expanded scheme. It is possible that a private sector arrangement would positively impact on business reputation but it would not create an opportunity for across-industry participation or ideas exchange.

There is a key industry risk related to the competitive pressures experienced by the collectors under all three scenarios, but potentially this risk is greatest for the expanded scheme (in particular, if a WDF is applied). The number of collector businesses is declining and this creates a bottle neck. This, in turn, leads to illegal dumping, lack of participation in the scheme on the retailer side and lack of supply security and consistency on the end-user side. Additionally, the collection industry operates within a very competitive environment and it is possible that cost-cutting leads to health and safety hazards.

The administration costs of the status quo are very low, but the industry finds it difficult to find time to ensure compliance with the reporting requirements. This would not be an issue with the expanded scheme as registration would be mandatory and, therefore, costs would be increased across the entire sector and likely passed on to consumers.

The status quo does not impact on import or export of tyres. A number of stakeholders indicated that import of used tyres was unnecessarily aggravating the problem by reducing the average life-time of the tyre. The expanded scheme could potentially affect imports.